The recent processing of the “Insurance Framework” (PLC (Ancillary Law Bill) No. 29/2017), examined by CAE – Committee on Economic Affairs, and approved by the Senate’s Plenary Sitting on June 18, has sparked off a heated debate within the industry.
Although Fipecafi – the Institute Foundation for Accounting, Actuarial, and Financial Research – estimates that the bill will double the influence of the security industry on the Brazilian GDP, it seems elementary to take into account the “potential challenges” that will arise as far as these new measures are implemented.
The expression (“potential challenges”) is a result of the extreme sense of hope and passion of those who work in this branch of law concerned with the structural integrity of the industry in the prevalence of any personal interests, mainly because for large-risk insurance the bill strikes as a catastrophe.
One of the most debated changes is the imposition of stricter schedules for contractual updates and claims payment. Without even looking at the large risks, under the argument of increasing transparency in the insured-insurer relationship, the substantial impact on the operating costs of companies is taken for granted.
At first glance, the imposition of reduced deadlines may seem positive, but it does not take into account the complexity of many cases. Despite the occasional and infinitesimal additional margin – of five days – to request additional documents before payment is released, these determinations overlook claims that require thorough investigations and, consequently, much more time for proper assessments.
It is unsettling to think that the strictness of the deadlines may create significant difficulties for the agile development of new goods and services, potentially raising administrative costs and, as a result, premiums for the insured. In other words, the rigidity of deadlines brings about economic inefficiency and market asymmetry.
Needless to say, there are advances, such as virtual contracts, already widely used but now finally provided in the framework.
Despite being approved by the Senate, the legislative process keeps hope alive as it imposes new stages of processing, with the bill’s return to the Chamber of Deputies for reassessment. While the Bill has been applauded as a necessary regulatory advance, it is essential to closely follow up the next steps of its implementation to avoid profound adverse impacts.
Sérgio Luiz Bernardelli Junior is a lawyer at Ernesto Borges Advogados law firm with an emphasis on Insurance Law, graduated in Business Administration from UFMS, Master’s student in Law at IDP Brasília, and holder of a Master’s degree in Constitutional Law.
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1 Available at: https://veja.abril.com.br/coluna/radar/marco-legal-pode-expandir-mercado-de-seguros-em-r-300-bilhoes-diz-estudo
2 Is Bill No. 29/2017 already born as a Hurricane Beryl? This was a level 5 hurricane, which is the highest category of the Saffir-Simpson scale. Apart from the necessary changes and poetic license, let us imagine a level 5 Bill for the insurance industry: ”It is common for many roofs and walls to collapse in a wide reach, especially those with interior supports. Irreparable and very heavy damage to many wooden structures, and total destruction to prefab houses and warehouses is prevalent. Only some types of structures are able to survive intact, and only if located at least 3 to 5 miles (5 to 8 km) inland”. https://g1.globo.com/mundo/noticia/2024/07/02/beryl-qual-o-impacto-de-um-furacao-categoria-5-como-o-que-atinge-o-caribe.ghtml and https://pt.wikipedia.org/wiki/Escala_de_furac%C3%B5es_de_Saffir-Simpson..
3 What is the limit of transparency with an alternative capable of solving questions posed? Is transparency tangible and sufficient? See: Zarsky, T. Transparent Predictions. University of Illinois Law Review, Vol. 2013, No. 4, p. 1503-1570, 2013.
Available in: https://www.migalhas.com.br/depeso/412967/novo-marco-legal-dos-seguros-potenciais-desafios-ou-impactos-adversos
Autor: Sergio Luiz Bernardelli Junior • email: sergio.bernardelli@ernestoborges.com.br
