Legal Framework for Insurance: Main Impacts

On December 9, 2024, after a long process, Law 15,040 was enacted to regulate insurance contracts in Brazil. The new law, consisting of 134 articles, repeals Articles 206, §1, II and Articles 757 to 802 of the Civil Code, as well as Articles 9 to 14 of Decree-Law No. 73/66 (which deals with the National Private Insurance System, and, among other aspects, regulates insurance and reinsurance operations), thus bringing significant changes to the insurance sector.

The law is structured as follows:

• Title I: General Provisions (Articles 1 to 88)
• Title II: Property Insurance (Articles 89 to 111)
• Title III: Life and Physical Integrity Insurance (Articles 112 to 124)
• Title IV: Mandatory Insurance (Article 125)
• Title V: Statute of Limitation (Articles 126 and 127)
• Title VI: Final and Transitional Provisions (Articles 128 to 134)

Among the main aspects addressed by the new law, we highlight the following:

• Risk Assessment and Allocation: The law includes definitions of limitation, elimination, significant aggravation, and significant reduction of the contracted risk, determining specific consequences for each of these hypotheses and creating obligations for both the insured and the insurer.
• Provision of Information: There are precise provisions on when and how information should be exchanged between the parties, establishing penalties for non-compliance.
• Contract Formation: New rules on the binding nature of proposals sent and received, as well as deadlines for acceptance. The law regulates cases of tacit agreement, which further demonstrates the necessity of revising the procedures that are currently employed in the insurance market.
• Types of Insurance: The existence of specific rules for property insurance, life and physical integrity insurance, and mandatory insurance. This brings aspects to be considered for existing and new contracts, such as new guidelines for apportionment, subrogation, and transfer.
• Claims Regulation and Settlement: This point regulates the procedures, deadlines, and even the consequences of non-compliance with such deadlines in the regulation phases, which aim to identify the causes and effects of the claim, and the settlement of amounts owed by the insurer (or replacement in kind).
• Statute of limitation: New specific limitation periods are established for certain insurance claims.
• Definition of Applicable Law, Jurisdiction, and Venue: The law that applies for the resolution of disputes related to insurance contracts executed in the country is the Brazilian law, with the absolute jurisdiction of the Brazilian courts. The venue will be the domicile of the insured or beneficiary, unless the insured or beneficiary files a lawsuit opting for the domicile of the insurer or its agent. In the case of lawsuits and arbitrations between the insurer, reinsurer, and retrocessionaire, the companies will respond in the forum of their domicile in Brazil.

The Legal Framework for Insurance will come into effect one year from the date of its publication, which occurred on December 10, 2024.

The Contracts team at Souto Correa is monitoring the developments of the new law and is available to provide further information on the subject.