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Contracts

General

What general rules, requirements and procedures govern the conclusion of (re)insurance contracts in your jurisdiction?

The conclusion of insurance and reinsurance contracts in Brazil is governed by:

  • Decree-Law 73/66;
  • Complementary Law 126/07; and
  • Articles 757 to 802 of the Civil Code (Law 10,406/02).

Reinsurance policy is governed by Complementary Law 126/07. In addition, the National Council of Private Insurance (CNSP) and the Superintendence of Private Insurance (SUSEP) are responsible for formulating private insurance policy, through resolutions and circulars.

Mandatory/prohibited provisions

Are (re)insurance contracts subject to any mandatory/prohibited provisions?

Yes. The technical provisions for (re)insurers are set out in Articles 1 and 23 of CNSP Resolution 321/15, which set out mandatory provisions, without prejudice to others, to be constituted with prior authorisation from the SUSEP.

Implied terms

Can any terms by implied into (re)insurance contracts (eg, a duty of good faith)?

Yes. According to Article 72 of Decree-Law 73/66, combined with Article 25 of Law 4595/64, an insurance company must be incorporated in the form of a corporation. A local reinsurance company must also be incorporated in the form of a corporation, according to Complementary Law 126/07.

Standard/common terms

What standard or common contractual terms are in use?

Some standard and common clauses are used for insurance and reinsurance contracts (eg, coverage clause, coverage risks, excluded risks, premium payment, claims adjustment and loss of rights).

Moreover, some standard and common terms are used for insurance and reinsurance contract wordings (eg, ‘insurer’, ‘reinsurer’, ‘insured’, ‘policyholder’, ‘loss adjustment’, ‘claim’, ‘policy’ and ‘liability’). A regulatory glossary with definitions and terms usually used in the insurance and reinsurance market is available on the website of the SUSEP in both Portuguese and English.

‘Smart’ contracts

What is the state of development in your jurisdiction with regard to the use of ‘smart’ contracts (ie, blockchain based) for (re)insurance purposes? Are any other types of financial technology commonly used in the conclusion of (re)insurance contracts?

In Brazil, regulations for insurance contracts prevent the free development of ‘smart’ contracts and innovative technologies. Insurance operations have firm rules based on traditional hiring models. Some actions can be seen in terms of digital platforms, but these are strongly limited by the regulatory authority. However, reinsurance contracts are traditionally executed, and no innovations have been seen to date.

Breach

What rules and procedures govern breach of contract (for both (re)insurer and insured)?

Breach of contract is primarily governed by:

  • Decree-Law 73/66;
  • Complementary Law 126/07; and
  • Articles 757 to 802 of the Civil Code (Law 10,406/02).

Reinsurance policy is governed by Complementary Law 126/07.

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