INDEX
COMPLEMENTARY LAW No. 126, OF 15 JANUARY 20071
Establishing policies for reinsurance, retrocession and intermediation, coinsurance operations, insurances contracted abroad and foreign currency operations in the insurance sector; amending Decree-law No. 73, of 21 November 1966 and Law No. 8031, of 12 April 1990; and making other arrangements.
THE VICE-PRESIDENT OF THE REPUBLIC, acting as THE PRESIDENT OF THE REPUBLIC
I hereby make known that the National Congress decrees and I ratify the following Complementary Law:
CHAPTER I
THE PURPOSE
Art. 1st - This Complementary Law establishes policies for reinsurance, retrocession and intermediation, coinsurance operations, insurances contracted abroad and foreign currency operations in the insurance sector.
CHAPTER II
THE REGULATION AND THE SUPERVISION
Art. 2nd - The regulation of coinsurance, reinsurance, retrocession and intermediation operations will be exerted by the insurance regulatory body, as determined by law and in accordance with the clauses of this Complementary Law.
§1st - For the purposes of this Complementary Law, the following definitions apply:
I - cedent: the insurer that contracts a reinsurance operation or the reinsurer that contracts a retrocession operation;
I - cedent: the institution authorised to operate private insurance or manage mutual asset protection operations that contracts reinsurance operations or the reinsurer that contracts retrocession operations;
(Note: item I amended by Complementary Law no. 213, of 15 January 2025)
II - coinsurance: an insurance operation in which 2 (two) or more insurers, with the consent of the insured, share the risks of a policy among them, in percentage factors, with no joint and several liability among them;
III - reinsurance: a risk transfer operation from a cedent to a reinsurer, with exception of the contained in item IV of this paragraph;
IV - retrocession: a reinsurance risk transfer operation from reinsurers to reinsurers, or from reinsurers to local insurers.
§2nd - The regulatory body regulations referred to in the head of this article will not impair the actions of the cedents’ regulatory bodies within the exclusive scope of their powers, especially with respect to the control of the executed operations.
§3rd - A cooperative authorized to operate in private insurances, which contracts a reinsurance operation will be considered a cedent, provided that the conditions imposed on the insurers by the insurance regulatory body also apply to the cooperative.
Art. 3rd - The supervision of coinsurance, reinsurance, retrocession and intermediation operations will be exerted by the insurance supervisory body, as determined by law, without prejudice to the powers of other cedents’ supervisory bodies.
Sole paragraph - The insurance supervisory body will retain the same powers, with respect to reinsurers, intermediaries and their respective activities, as it retains with respect to insurers, insurance brokers and their respective activities.
CHAPTER III
THE REINSURERS
Section I
The Qualification
Art. 4th - The reinsurance and retrocession operations may be executed by the following types of reinsurers:
I - local reinsurer: a reinsurer based in Brazil as a corporation, whose sole purpose is to execute reinsurance and retrocession operations;
II - admitted reinsurer: a reinsurer based abroad, with a representative office in Brazil and that, in accordance with the requirements established in this Complementary Law and in the norms concerning reinsurance and retrocession activities, is registered as such by the insurance supervisory body to exert reinsurance and retrocession operations; and
III - occasional reinsurer: a foreign reinsurance company based abroad, without a representative office in Brazil and that, in compliance with the requirements established in this Complementary Law and in the norms concerning reinsurance and retrocession activities, is registered as such by the supervisory body to exert reinsurance and retrocession operations.
Sole paragraph - The registration referred in item III of the head of this article is prohibited to foreign companies based in tax havens, defined as those countries which do not tax income or tax it at a rate lower than 20% (twenty percent), or those whose inland legislation enforces secrecy concerning corporations’ list of shareholders or ownership.
§1st - The registration referred in item III of the head of this article is prohibited to foreign companies based in tax havens, defined as those countries which do not tax income or tax it at a rate lower than 20% (twenty percent), or those whose inland legislation enforces secrecy concerning corporations’ list of shareholders or ownership.
(Note: Renumbered from the sole paragraph by Complementary Law No. 137, of 26 August 2010)
§2nd - A fund which has as its sole purpose the supplementary coverage for risks of the rural insurance, comprising the agriculture, livestock, aquiculture and forest modalities, will be considered a local reinsurer, for the purpose of contracting reinsurance and retrocession operations, subject to specific law’s provisions.
(Note: Paragraph 2nd added by Complementary Law No. 137, of 26 August 2010)
Section II
The Applicable Norms
Art. 5th - Considering the technical, contractual, operational and strategic risks peculiar to the activity, as well as the provisions of the insurance regulatory body, the following norms apply to local reinsurers:
I - The Decree-law No. 73 of 21 November 1966 and other laws applicable to insurers, including the ones concerning intervention and liquidation of companies, management’s mandate and accountability; and
II - the norms established for insurers.
Art. 6th - Admitted or occasional reinsurers must meet the following minimum requirements:
I - to be organized according to the laws of its base country for underwriting local and international reinsurances in the branches that the reinsurer intends to operate in Brazil, and to be in operation in its base country for more than 5 (five) years;
II - to possess economic and financial capacity not lower than the minimum established by the Brazilian insurance regulatory body;
III - to maintain a solvency rating issued by a rating agency recognized by the Brazilian insurance supervisory body that equals or exceeds the minimum rating established by the Brazilian insurance regulatory body;
IV - to appoint an attorney-in-fact, domiciled in Brazil, with comprehensive administrative and judicial powers, including the power to receive summons and to whom all official notices will be sent; and
IV - to appoint an attorney-in-fact, domiciled in Brazil, with special powers to receive summons, intimations, official notices and other communications; and
(Note: Item IV amended by Complementary Law No. 137, of 26 August 2010)
V - other requirements, which may be determined by the Brazilian insurance regulatory body.
Sole paragraph - Further requirements for admitted reinsurers are:
I - maintaining a foreign currency escrow account linked to the Brazilian insurance supervisory body, in the form and amount as defined by the Brazilian insurance regulatory body, as a guarantee to their operations in Brazil;
and
II - rendering periodic financial statements in the form established by the Brazilian insurance regulatory body.
Art. 7th - The supervisory fee to be paid by local and admitted reinsurers will be specified in conformity with the law.
CHAPTER IV
THE BASIC CRITERIA FOR CESSION
Art. 8th - Contracting reinsurance and retrocession in Brazil or abroad will be executed through direct negotiations between the cedent and the reinsurer, or by means of a legally authorized intermediary.
§1st - The Executive Branch will determine the maximum limit that may be ceded annually to occasional reinsurers.
§2nd - The intermediary referred to in the head of this article is the authorized reinsurance broker, a company, holding a professional liability insurance policy as established by the insurance regulatory body, and having an individual specialized and chartered insurance broker as its technical manager.
Art. 9th - The transfer of risks will only be executed in operations of:
I - reinsurance, with local, admitted or occasional reinsurers; and
II - retrocession, with local, admitted or occasional reinsurers, or with local insurers.
§1st - The reinsurance operations related to endowment life insurances and complementary pension can only be executed with local reinsurers.
§2nd - The insurance regulatory body may establish limits and conditions for the retrocession of the risks related to the operations mentioned in the § 1st of this article.
§3rd - A fund which has as its sole purpose the supplementary coverage for risks of the rural insurance, comprising the agriculture, livestock, aquiculture and forest modalities is authorized to contract reinsurance, retrocession and other means of risk transfers, inclusively with legal entities not comprised by items I and II of the head of this article.
§4th - The insurance regulatory body is authorized to set norms for risk transfers in reinsurance and retrocession operations, involving legal entities not comprised by items I and II of the head of this article, when the offered capacity by local, admitted and occasional reinsurers is proven insufficient.
(Note: Paragraphs 3rd and 4th included by Complementary Law No. 137, of 26 August 2010)
Art. 10 - The insurance supervisory body will be given access to all reinsurance and retrocession contracts, including those entered into abroad, otherwise the reinsurance and retrocession contracts will be considered void in all of their effects.
Art. 11 - Subject to the norms of the insurance regulatory body, cedents will contract or offer preferably to local reinsurers, at least:
I - 60% (sixty percent) of their reinsurance cession, during the first 3 (three) years as of the date of publication of this Complementary Law; and
II - 40% (forty percent) of their reinsurance cession, after 3 (three) years following the publication of this Complementary Law.
§1st - (VETOED)
§2nd - (VETOED)
§3rd - (VETOED)
§4th - (VETOED)
§5th - (VETOED)
§6th - (VETOED)
CHAPTER V
THE OPERATIONS
Section I
General Provisions
Art. 12 - The insurance regulatory body will establish guidelines for reinsurance, retrocession and reinsurance brokerage operations and for the operation of representative offices of admitted reinsurers, with due observance of the provisions of this Complementary Law.
Sole paragraph. The insurance regulatory body may establish:
I - mandatory clauses in contractual instruments related to reinsurance and retrocession operations;
II - deadlines for the contractual formalization;
III - restrictions related to certain risk transfer operations;
IV - requirements for limits, overseeing and monitoring of intra-group operations; and
V - requirements other than those mentioned in items I through IV of this paragraph.
Art. 13 - Reinsurance contracts should include a clause recognizing that in the event of the liquidation of the cedent, the reinsurer’s liabilities before the cedent’s bankruptcy estate will remain, whether or not indemnification or benefit have been paid by the cedent to insureds, participants, beneficiaries or retirees, with exception of the cases comprised by Art. 14 of this Complementary Law.
Art. 14 - Reinsurers and their retrocessionaires will not be directly liable before the insured, participant, beneficiary or retiree for the shares assumed in reinsurance and retrocession contracts, remaining the cedents that issued the original policy entirely liable for indemnifying them.
Sole paragraph - In the event of the cedent’s insolvency, decreed liquidation, or bankruptcy, the direct payment of the indemnification or benefit to the insured, participant, beneficiary or retiree, corresponding to the reinsurance share is permitted, provided that the respective share has not been paid by the cedent to the insured, nor by the reinsurer to the cedent, when:
I - the reinsurance contract is regarded as facultative, as defined by the insurance regulatory body; or
II - in the other cases, if a contractual cut-through clause exists.
Art. 15 - No clauses that limit or restrict the direct relationship between cedents and reinsurers will be included in contracts intermediated by reinsurance brokers, nor powers or abilities will be granted to such brokers other than those necessary and appropriate to the performance of their duties as independent intermediaries in contracting the reinsurance.
Art. 16 - The inclusion of an intermediary clause is mandatory in the contracts referred to in Art. 15 of this Complementary Law, and it will state whether or not the broker is authorized to receive reinsurance premiums or to collect the amount corresponding to the recovery of indemnifications or benefits.
Sole paragraph - In case the broker is authorized to receive, or to collect, the sums referred to in the head of this article, the following procedures apply:
I - the payment of the premium by the cedent to the broker will be deemed to constitute payment to the reinsurer; and
II - the payment of indemnification or benefit by the reinsurer to the broker will be deemed to constitute payment to the cedent only to the extent that such payment is actually received by the cedent.
Art. 17 - The investment of the resources held as technical provisions, and of the local reinsurers' funds, as well as of the resources required from admitted reinsurers as a guarantee to their obligations in Brazil, will be executed in compliance with the guidelines of the Conselho Monetário Nacional - CMN (National Monetary Council).
Section II
The Operations in Foreign Currency
Art. 18 - Insurance, reinsurance and retrocession may be executed in Brazil in foreign currency, with due observance of the legislation ruling such operations, the norms set by the CMN and the norms set by the insurance regulatory body.
Sole paragraph - The CMN will regulate the opening and maintenance of foreign currency accounts held by insurers, local reinsurers, admitted reinsurers and reinsurance brokers.
Section III
The Insurance in Brazil and Abroad
Art. 19 - The following insurances will be entered into exclusively in Brazil, with exception of the provisions of Art. 20 of this Complementary Law:
I - the compulsory insurances; and
II - the non-compulsory insurances contracted by natural persons resident in Brazil, or by legal entities of any legal form domiciled in the Brazilian territory, to guarantee risks in Brazil.
Art. 20 - Contracting insurances abroad by natural persons resident in Brazil, or by legal entities domiciled in the Brazilian territory is restricted to the following circumstances:
I - coverage of risks for which there is no insurance supply in Brazil, provided that its assignment does not represent an infringement to the prevailing legislation;
II - coverage of risks abroad in which the insured is a natural person resident in Brazil, being the term of the insurance contract exclusively limited to the period of time of the insured’s stay abroad;
III - insurances which are the subject matter of international agreements endorsed by the National Congress; and
IV - insurances that were contracted abroad in accordance with existing legislation at the time of the publication of this Complementary Law.
Sole paragraph - Legal entities may contract insurance abroad to cover risks abroad, informing the Brazilian insurance supervisory body with due observance of the deadline and conditions as determined by the Brazilian insurance regulatory body.
CHAPTER VI
THE DISCIPLINARY GOVERNANCE
Art. 21 - The cedents, the local reinsurers, the admitted reinsurer’s representative offices, the individual brokers, the insurance, reinsurance and retrocession brokers and the independent auditing services providers, as well as all natural or legal persons who violate the norms related to reinsurance, retrocession and reinsurance brokerage activities will be subject to the penalties provided for in Arts. 111, 112 and 128 of Decree-law No. 73, of 21 November 1966, imposed by the insurance supervisory body, according to the norms of the insurance regulatory body.
Sole paragraph - The offences referred to in the head of this article will be verified through an administrative procedure governed by Art. 118 of Decree-law No. 73, of 21 November 1966.
CHAPTER VII
FINAL PROVISIONS
Art. 22 - The IRB-Brasil Resseguros S.A. is hereby authorized to continue exercising its reinsurance and retrocession activities, without any interruption, irrespective of any requirement and governmental authorization, qualified as a local reinsurer.
Sole paragraph - The IRB-Brasil Resseguros S.A. will render to the insurance supervisory body technical information and copy of its data base and any other documents or records that the supervisory body deems necessary to perform its supervisory functions with respect to insurance, coinsurance, reinsurance and retrocession operations.
Art. 23 - The Brazilian Federal Government, hereby represented by the Union is authorized to offer to the preferred shareholders of IRB-Brasil Resseguros S.A., the option to withdraw the capital held in the company, based on the relevant corporate deliberation, for the exclusive end of subscribing shares of reinsurance companies based in Brazil.
Sole paragraph - (VETOED)
Art. 24 - The insurance supervisory body will provide the Union’s Attorney General with the information and documents necessary to defend the Union in lawsuits to which it is a party.
Art. 25 - In case an administrative inquiry is set up, the insurance supervisory body may request the relevant judicial authority to waive financial institutions’ secrecy regarding information and documents related to assets, rights and liabilities of the individuals or legal entities subject to its supervisory powers.
Sole paragraph - The insurance supervisory body, the Banco Central do Brasil (Central Bank of Brazil) and the Comissão de Valores Mobiliários - CVM (Securities and Exchange Commission of Brazil) will maintain a permanent interchange of information concerning the results of inspections carried out, investigations set up and penalties imposed, whenever such information is necessary to the performance of their activities.
§1st - The insurance supervisory body, the Banco Central do Brasil (Central Bank of Brazil) and the Comissão de Valores Mobiliários - CVM (Securities and Exchange Commission of Brazil) will maintain a permanent interchange of information concerning the results of inspections carried out, investigations set up and penalties imposed, whenever such information is necessary to the performance of their activities.
(Note: Renumbered from the Sole paragraph by Complementary Law No. 137, of 26 August 2010)
§2nd - The insurance supervisory body may enter into agreements:
I - with the Banco Central do Brasil (Central Bank of Brazil), the Comissão de Valores Mobiliários - CVM (Securities and Exchange Commission of Brazil) and other supervisory bodies, aiming at the performance of joint supervisory audits, with due observance of the respective jurisdictions;
II - with other countries’ supervisory, regulatory and self-regulatory bodies or supervisory entities aiming at:
a) the supervision of representative offices, branches and subsidiaries of foreign insurers and reinsurers operating in Brazil, and of branches and subsidiaries of Brazilian insurers and reinsurers abroad, as well as the supervision of capital remittances to, or admissions from abroad, arising out of insurance, reinsurance and retrocession operations;
b) the mutual cooperation and information interchange, designed to investigate activities or operations which may suggest the investment, negotiation, concealment or transfer of financial assets and securities related to unlawful conducts, or that by any other form might relate to any potential unlawfulness.
(Note: Paragraph 2nd, items I and II, as well as lines “a” and “b” included by Complementary Law No. 137, of 26 August 2010)
§3rd - The information interchange among the bodies and entities mentioned at items I and II of the §2nd of this article does not represent a secrecy violation, being such bodies and entities expected to protect the accessed information’s security.
(Note: Paragraph 3rd included by Complementary Law No. 137, of 26 August 2010)
Art. 26 - The clearing and settlement houses and service providers that are authorized to operate under current legislation, as well as the institutions authorized to provide custodial services for the Comissão de Valores Mobiliários (Securities and Exchange Commission of Brazil), will provide the insurance supervisory body with the information they hold about the following operations, provided that the insurance supervisory body declares the need of such information to carry out its activities:
I - investment funds specifically established to receive funds from insurers, savings bonds companies and open complementary pension entities; and
II - investment funds with segregated assets, linked exclusively to complementary pension plans or endowment life insurances, structured as a variable contribution modality, marketed and managed by those investment funds.
Art. 27 - Arts. 8th, 16, 32, 86, 88, 96, 100, 108, 111 and 112 of Decree-law No. 73, of 21 November 1966, are hereby amended as follows:
"Art. 8th - ................................................................................................................................
c) by the reinsurers;
...................................................................................................................................." (New wording)
"Art. 16 - ................................................................................................................................
Sole paragraph. - (VETOED)."
"Art. 32 - ................................................................................................................................
VI - establish capital requirements for insurers and reinsurers;
................................................................................................................................................
VIII - regulate coinsurance operations;
IX - (repealed);
................................................................................................................................................
XIII - (repealed);
...................................................................................................................................." (New wording)
"Art. 86 - Insureds and beneficiaries who are creditors of an indemnification, adjusted or yet to be adjusted, enjoy special privileges over technical reserves, special funds or provisions related to the guarantee of insurance, reinsurance and retrocession operations.
Sole paragraph - Following the payment to policyholders and beneficiaries referred to in the head of this article, the mentioned privileges will be granted to insurers and afterwards to reinsurers, concerning technical reserves, special funds or provisions related to the guarantee of insurance, reinsurance and retrocession operations." (New wording)
"Art. 88 - Insurers and reinsurers will comply with the norms and instructions from the insurance regulatory and supervisory bodies related to insurance, coinsurance, reinsurance and retrocession operations, as well as will provide such bodies with data and information in relation to any aspect of their activities.
Sole paragraph - Insurance supervisory body’s inspectors and duly authorized officers will have full access to insurers and reinsurers, being entitled to request and seize books, technical notes and documents, and any obstacle imposed to the purposes of this article will represent an obstruction to the supervision, therefore giving cause to the penalties provided for in this Decree-law." (New wording)
(Note: part repealed by Complementary Law no. 213, of 15 January 2025)
"Art. 96. .................................................................................................................................
c) accumulate significant liabilities owed to reinsurers, at the supervisory body’s discretion with due observance of the insurance regulatory body’s directives;
..................................................................................................................................." (New wording)
"Art. 100. ...............................................................................................................................
c) the list of credits of the Public Treasury and the Social Security;
...................................................................................................................................." (New wording)
"Art. 108 - An offence to the norms concerning insurance, coinsurance and savings bonds, as defined by the insurance regulatory body, subjects the liable natural person or legal entity to the following administrative penalties, imposed by the insurance supervisory body:
I - admonition;
II - suspension of activities or profession comprised by this Decree-law for a period of up to 180 (one-hundred and eighty) days;
III - disqualifying for a period of 2 (two) years to 10 (ten) years from performing a position or function in the civil service and in public companies, mixed economy companies and respective subsidiaries, complementary pension entities, savings bonds companies, financial institutions, insurers and reinsurers;
IV - fine of R$ 10,000.00 (ten thousand reais) to R$ 1,000,000.00 (one million reais); and
V - suspension from operating in 1 (one) or more insurance or reinsurance branches.
VI - (repealed);
VII - (repealed);
VIII - (repealed);
IX - (repealed).
§1st - The penalty of item IV of the head of this article will be ascribed to the responsible agent, being the reinsurer, insurer or savings bonds company jointly and severally liable, with redress rights, and it may be imposed cumulatively with the penalties cited in items I, II, III or V of the head this article.
§2nd - The decisions of the insurance supervisory body may be the subject of appeal to the relevant body within 30 (thirty) days, with staying effect.
§3rd - The appeal referred to in §2nd of this article with respect to the item IV of the head of this article will only be recognized if the petitioner anticipate a deposit to the insurance supervisory body of 30% (thirty percent) of the amount of the fine.
§4th - In case the fine penalty is dismissed, the insurance supervisory body will return the credited amount within 90 (ninety) days following the interested party’s request.
§5th - In case of recidivism, the fine will be aggravated to up to two times the amount of the previous fine, according to the criteria established by the insurance regulatory body."
"Art. 111 - It is incumbent on the insurance supervisory body to issue norms about the independent auditing services providers’ reports and opinions to reinsurers, insurers, savings bonds companies and open complementary pension entities.
a) (repealed);
b) (repealed);
c) (repealed);
d) (repealed);
e) (repealed);
f) (repealed by Law No. 9932 of 20 December 1999);
g) (repealed);
h) (repealed);
i) (repealed).
§1st - Independent auditing services providers to reinsurers, insurers, savings bonds companies and open complementary pension entities will be civilly liable for damages caused to third parties as a consequence of fault or deceit while performing the functions set forth in this article.
§2nd - Irrespective to the provisions set forth in the head of this article, independent auditing services providers will respond administratively before the insurance supervisory body for acts or omissions while performing independent auditing activities for reinsurers, insurers, savings bonds companies and open complementary pension entities.
§3rd - In case administrative proceedings are set up a against reinsurers, insurers, savings bonds companies and open complementary pension entities the insurance supervisor body may, considering the severity of the offence, as a precaution, request those companies to replace their independent auditing services provider.
§4th - In case it is confirmed that the independent auditing services provider referred to in the head this article committed any irregularity, the penalties set forth in Art. 108 of this Decree-law will apply.
§5th - In case the audited entities referred to in the head of this article are regulated or supervised by the Comissão de Valores Mobiliários (Securities and Exchange Commission of Brazil), or by other regulatory and supervisory bodies, the provisions of this article will not adversely affect the powers of those bodies in regulating and supervising the performance of the respective independent auditing services providers, and to impose the penalties set forth in the specific legislation, inclusively on those auditors." (New wording)
"Art. 112 - A fine will be imposed on persons who fail to contract any legally mandatory insurance, irrespective of other legal sanctions and the amounts will be:
I - two times the amount of the premium, when this is defined by the applicable legislation; and
II - in the other cases, 10% of the value at risk, or R$ 1,000.00 (one thousand reais), whichever amount is the greater. "(NR)
Art. 28 - (VETOED)
Art. 29 - The coinsurance, reinsurance and retrocession regulation should provide no less than 180 (one-hundred and eighty) days for the Instituto de Resseguros do Brasil (IRB-Brasil Resseguros S.A.) to adapt to new business norms, reinsurance operations, renewal of retrocession contracts, accounting plans, tax rules, oversight of the retrocession business abroad and any other aspects concerning the change in the regulatory framework resulting from this Complementary Law.
Art. 30 - This Complementary Law will be enacted as of the date of its publication.
Art. 31 - Arts. 6th, 15 and 18, the line i of the head of Art. 20, Arts. 23, 42, 44 and g45, the §4th of the Art. 55, Arts. 56 through 71, the line c of the head and the §1st of Art. 79, Arts. 81 and 82, the §2nd of Art. 89 and Arts. 114 and 116 of Decree-law No. 73, of 21 November 1966, and Law No. 9932 of 20 December 1999 are hereby repealed.
Brasília, 15 January 2007, 186th year of Independence and 119th year of the Republic.
José Alencar Gomes da Silva
Guido Mantega
Álvaro Augusto Ribeiro Costa
(Official Gazette “DOU” of 16 January 2007)
