RESOLUTION Nº 407, OF 29 MARCH 2021 (*)
Providing for the general principles and characteristics for the development and trading of property and casualty insurance contracts for the coverage of large risks.
THE PRIVATE INSURANCE SUPERINTENDENCY – SUSEP, in accordance with the provisions set forth in art. 34, item XI, of Decree 60.459, of 13 March 1967, makes it public that the NATIONAL COUNCIL FOR PRIVATE INSURANCE - CNSP, in its regular session held on 26 March 2021, considering art. 32, items I and IV, of Decree-Law 73, of 21 November 1966, and Law 13.874, of 20 November 2019, and the contents of File Susep 15414.611072/2020-44, resolves:
Art. 1. To provide for the general principles and characteristics for the development and trading of property and casualty insurance contracts for the coverage of large risks.
Art. 2. Property and casualty insurance contracts for the coverage of large risks are understood as those featuring the following characteristics:
I - are part of the lines of business or groups of lines of business of oil risks, named perils and operational risks - “RNO”, bankers comprehensive insurance, aviation, marine and nuclear, and, in case the insured is a corporate entity, domestic credit and export credit; or
II - are part of other lines of business, provided that they are contracted by means of express agreement between corporate entities, including policyholders, which present at least one of the following characteristics at the time of its contracting and renewal:
a) maximum limit of guarantee (“LMG”) higher than R$ 15,000,000.00 (fifteen million Real);
b) total assets higher than R$ 27,000,000.00 (twenty-seven million Real), in the immediately preceding financial year; or
c) annual gross revenue higher than R$ 57,000,000.00 (fifty-seven million Real) in the immediately preceding financial year.
§ 1. Insurances contracted by means of a single individual policy, by more than one policyholder or insured, provided that at least one of the policyholders or insureds present at least one of the characteristics described in subitems “b” or “c” of this item, can also be considered property and casualty insurance contracts for the coverage of large risks as per item II of this article.
§ 2. As for the surety bond insurance, the contract can also be classified as large risks if the principal or obligee belongs to a business group that fulfils the provisions of subitems “b” and c” of this item, and the policy contains express mention to that existing ownership, in a unequivocal and objective manner.
§ 3. The circumstance set forth in the previous paragraph applies only to the principal or obligee that has proper legal personality and is part of the business group under common control or executive management, or under the same controlling interest.
Art. 3. For the purposes of this Resolution, contractual conditions are the series of provisions ruling the contracting of a property and casualty insurance plan for the coverage of large risks.
CHAPTER I
PRELIMINARY PROVISIONS
Art. 4. The property and casualty insurance contracts for the coverage of large risks shall be ruled by contractual conditions freely conventioned between insureds and policyholders or their legal representatives, and the insurance company, and as a minimum the following principles and basic values should be attended:
I - full negotiation freedom;
II - good faith;
III - transparent and objective information;
IV - equality of treatment between the contracting parties;
V - incentive to the use of alternative dispute resolutions; and
VI - ancillary and exceptional state intervention in the products formatting process.
§ 1. The principle of contractual freedom referred to in item I prevails over the other specific regulatory requirements concerning insurance plans, provided that they do not go against the provisions of this Resolution, thus reflecting the parties’ full capacity of negotiation of the contractual conditions.
§ 2. The insurance contract conditions should be negotiated and agreed upon in a way that there is an explicit statement of will from the insureds and policyholders or their legal representatives, and from the insurance company.
§ 3. The contracting parties are allowed to adopt existing rules in the specific property and casualty regulations, including their relevant concepts and technical definitions.
Art. 5. Any changes in the insurance contract in force can only be executed with the explicit agreement of the contracting parties.
CHAPTER II
MINIMUM COMPULSORY ELEMENTS IN THE INSURANCE CONTRACTUAL CONDITIONS
Art. 6. The contractual conditions should have a rational ordering and a clear and objective wording, with emphasis on the obligations and restrictions affecting the insured’s rights.
Sole paragraph. Also, they should contain a glossary for technical terms and loanwords.
Art. 7. The contractual conditions and the actuarial technical notes related to the property and casualty insurance contracts for the coverage of large risks are not subject to the electronic registry at Susep prior to their trading, and should be stored by the insurance company in accordance with the specific regulations for this matter.
Sole paragraph. Also, the insurance company should keep the documents proving the insurance contracting, the ones related to the underwriting guidelines and those confirming the compliance with art. 2, item II, subitems “b” and “c” of this Resolution.
Art. 8. The contractual conditions can set forth coverages for different lines of business of the property and casualty branch, thus taking the present accounting regulations into consideration.
Art. 9. The contractual conditions should establish the insurance company’s commitment before the insured concerning the coverages offered and the specific indemnifiable losses.
Sole paragraph. The express statement of will from the parties or their legal representatives, as well as the posting of documents and communications among them can be done through remote means, under the terms of the relevant regulations.
Art. 10. As a minimum, the contractual conditions clauses should expressly include the:
I - geographical scope of the coverages;
II - premium payment;
III - risks covered and excluded;
IV - precise definition of the inception and termination of the obligations;
V - procedures for the insurance renewal, as the case may be;
VI - criterion for changing and updating the amounts;
VII - losses advice, adjustment and settlement, including the minimum documentation required and the loss adjustment process in general;
VIII - hypothesis for the contractual termination;
IX - deductibles, minimum deductible amounts, waiting periods and restatement, as the case may be;
X - maximum indemnization limit (“LMI”) and/or maximum limit of guarantee (“LMG”), as the case may be;
XI - concurrent insurance policies, as applicable; and
XII - loss of rights.
§ 1. Further to the provisions of this article, the contractual conditions should contain the provisions for all coverages included in the insurance plan, specifying the covered risks, the excluded risks, and as the case may be, the goods and interests not comprised by the insurance.
§ 2. The clauses concerning the goods and interests not comprised and the excluded risks should have their words typing highlighted and entered next to the description of the covered risks.
§ 3. The contractual conditions can set forth coverage for any events, in the all risks format, with the exception of the expressly excluded risks.
§ 4. The contractual conditions should set forth the consequences of premium default and the need, as the case may be of previous notice from the insurance company to insureds and policyholders prior to the contingent termination of the contract.
Art. 11. In the cases of open policy insurances, the consequences of the non-payment of any declaration should be determined in the insurance contractual conditions, and it should be noted that the goods and interests related to the premiums already paid are covered for the duration of the declared risks.
CHAPTER III
SPECIFIC PROVISIONS
Section I
Oil Risks Insurance
Art. 12. For the purposes of this Resolution, oil risks are those concerning the operations, equipment and/or onshore or offshore installations, directly related to the activities of prospection, drilling, production, storage and refining of oil and gas.
Art. 13. The following are also included as oil risks when related to the activities mentioned in art. 12:
I - maintenance, conservation and construction of prospection, drilling, production and onshore and/or offshore storage units;
II - onshore and/or offshore pipelines used as mean of transportation or transfer;
III - support vessels, among them: drilling units, heavy cargo vessels, submarine pipelines launching vessels, maintenance and safety units, and other types of vessels involved in the oil transportation or offshore oil production or service/installation of pipelines and monobuoys;
IV - third-party liabilities coverages; and
V - financial losses.
Section II
Named Perils and Operational Risks Insurance
Art. 14. The insurances classified in the line of business of named perils and operational risks aim at guaranteeing the insured’s interest concerning property risks, and qualify as named perils or as operational risks as follows:
I - named perils: those where there is a clear identification of the risks, thus allowing the listing of the offered guarantees; and
II - operational risks: those where the complexity of the risks make their identification infeasible, being the definition of the coverage for property damages structured as all risks, thus guaranteeing coverage for any events related with the pursued activity, except for the expressly excluded risks.
Sole paragraph. The insurances mentioned in this article should present a “LMG” higher than R$ 15,000,000.00 (fifteen million Real).
Section III
Bankers Comprehensive Insurance
Art. 15. The bankers comprehensive insurance is meant to banks and other financial institutions and aims at guaranteeing, under agreed terms, the losses sustained by the insured in its valuables and goods as for the risks of robbery, theft, destruction or perishment, among others.
Section IV
Aviation Insurance
Art. 16. The hull coverage in aviation insurance comprises the aircraft’s loss or damage while on flight, taxiing, or while on the ground, including its on-board equipment and accessories.
Sole paragraph. The risks of accidents are guaranteed by the coverage mentioned in the head of this article, whatever the cause is, except for the ones arising from excluded risks.
Art. 17. Concerning the coverage for third-party liability of hangars and airport operations in aviation insurance, the insurance company guarantees the interest of the insured when this is liable for losses and damages caused to third-parties and is required to pay an indemnification, by way of a compensation following a judicial decision, an arbitration award, or an agreement with the injured third-parties with the insurance company’s consent, provided that those losses or damages result from the existence, the maintenance, the use and/or the operations and acts needed for the activities of a hangar or hangars, owned, leased or controlled by the insured, and taking into account the remaining provisions of the insurance contract.
§ 1. The insurance contract should clearly define the ways of indemnification and objectively if this is to be paid to the insured or directly to the injured third-party.
§ 2. Also, the insurance mentioned in the head of this article covers emergency expenses incurred by the insured while attempting to avoid and/or mitigate the damages caused to third-parties, in accordance with the contract’s provisions.
§ 3. Further to the events causing the insured’s obligation to pay an indemnification, as referred to in the head of this article, the insurance company can include among them an administrative order from the government requiring the insured to indemnify injured third-parties.
§ 4. The guarantee referred to in the head of this article can include defense costs and the insured’s counsel fees, as well as fines and civil and administrative penalties imposed to the insured.
§ 5. In case the guarantee mentioned in the previous paragraph is offered, the parties should expressly define, in the contractual conditions, if the insured is granted with the right to choose its counsellors.
Section V
Marine Insurance
Art. 18. The hull coverage in marine insurance comprises the vessel’s loss or average, whether in voyage or not, in any services and traffic at sea or rivers, channels or other navigable waterway, in ports or anchorages, or in dykes, shipyards, slipways or ramps, including its hull, its machinery and all equipment and accessories on-board.
Art. 19. For the purposes of this insurance, a port operator is understood as a corporate entity:
I - pre-qualified for the execution of port operations in organized port area; or
II - that moves and/or stores merchandise destined to and/or originating from waterway transportation in port installations of private use, located inside or outside the organized port area.
Sole paragraph. An organized port area is understood as the one comprising the port installations on the ground, the infrastructure concerning the protection and access of different modals to the port, and other required by law.
Art. 20. The port operations include the:
I - cargo and equipment handling;
II - local delivery services related to item I;
III - supply and maintenance of navigation support activities;
IV - onshore installations related to the supply and to the maintenance of docks, quays, dykes, slipways, anchorages, passenger terminals, buildings, structures, equipment, road and rail systems inside the port area; and safety services;
V - supply of emergency port services; and
VI - lease or permission of usage of any installation or equipment by third-parties.
Sole paragraph. Other operations, further to those described in subitems I to VI can be defined by means of an agreement between the insured and the insurance company.
Section VI
Nuclear Risks Insurance
Art. 21. The nuclear risks insurance is meant to guarantee the insured’s interest related to the coverage of property damages and third-party liability, arising from the risks covered by the relevant policy and referring to the nuclear energy activity, whose installations hold a license to operate, in accordance with the sector’s specific legislation.
Art. 22. In the nuclear risks insurance, the coverage for third-party liability is meant to guarantee the interest of the insured when this is liable for losses and damages caused to third-parties and is required to pay an indemnification, by way of a compensation following a judicial decision, an arbitration award, or an agreement with the injured third-parties, with the insurance company’s consent, as a consequence of the execution of its nuclear energy activity and resulting from risks covered by the relevant policy, provided that the remaining provisions of the insurance contract are taken into account.
§ 1. The insurance contract should clearly define the ways of indemnification and objectively if this is to be paid to the insured or directly to the injured third-party.
§ 2. Also, the insurance mentioned in the head of this article covers emergency expenses incurred by the insured while attempting to avoid and/or mitigate the damages caused to third-parties, in accordance with the contract’s provisions.
§ 3. Further to the events causing the insured’s obligation to pay an indemnification, as referred to in the head of this article, the insurance company can include among them an administrative order from the government requiring the insured to indemnify injured third-parties.
§ 4. The guarantee referred to in the head of this article can include defense costs and the insured’s counsel fees, as well as fines and civil and administrative penalties imposed to the insured.
§ 5. In case the guarantee mentioned in the previous paragraph is offered, the parties should expressly define, in the contractual conditions, whether the insured is granted with the right to choose its counsellors.
Section VII
Domestic credit and export credit insurance when the insured is a corporate entity
Art. 23. For the purposes of this Resolution, the domestic and export credit insurance is meant to guarantee losses generated from insured unpaid receivables, originating from sale of products, services rendering or credit granting, within the agreed terms, and whenever the insured is a corporate entity.
CHAPTER IV
FINAL PROVISIONS
Art. 24. The documents related to the property and casualty insurance contracts for the coverage of large risks that are to be stored by the insurance company, in accordance with art. 7 of this Resolution, should be made available for analysis and supervision when requested by Susep.
Art. 25. The insurance companies are responsible for the adequate and correct application of the contractual conditions for the property and casualty insurance of large risks.
Art. 26. Insurance companies cannot act simultaneously as insurer and insured in insurance contracts meant to guarantee their own risks.
Art. 27. The involved parties should agree and formally define in the contractual conditions of the insurance whether they will make use of mediation, arbitration or other means of settlement of litigation.
Sole paragraph. In case an arbitration convention is signed, the arbitral clause and the submission to arbitration should have a clear and objective wording, preferably prescribing an arbitration chamber freely chosen by the parties.
Art. 28. Any specific norms that regulate or come to regulate compulsory insurances or coverages, established in law, whether or not originating from international treaties, should be attended and prevail over this and other norms.
Art. 29. The provisions of this Resolution apply to the policies renewed or issued as of the date when it comes into force.
Art. 30. This Resolution does not apply to insurances that do not fulfil the requirements set forth in its art. 2, being the insurance companies, in case of non compliance, subject to the appropriate sanctions and penalties.
Art. 31. The Private Insurance Superintendency - Susep can regulate the property and casualty insurance operations functioning and complementary criterion.
Art. 32. This Resolution comes into force on 1 April 2021.
SOLANGE PAIVA VIEIRA
Superintendent
(Official Gazette “DOU” of 31 march 2021 – pages 132 and 163 – Section I)
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(*) The information provided in this publication is general and may not apply to a specific situation or person. Every effort has been made to ensure that matters of concern to readers are covered. Although the information provided is accurate, be advised that this is a developing area. The information contained herein is not intended to be relied upon or to be a substitute for legal advice in relation to particular circumstances. Specific legal advice should always be sought from experienced local advisers. Accordingly, Editora Roncarati accepts no liability for any loss that may arise from reliance upon this publication or the information it contains.
