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New regulation differentiates “mass” and “large risks”

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By Marcia Cicarelli


Published 23 December 2020


The segregation of large and mass risks was addressed through two Public Consultations: 16/2020 and 18/2020. The first one deals with Mass Risks, aiming simplification of products and clear and objective wordings.

Public Consultation No. 18/2020 establishes general principles and guidelines for the wordings and the commercialization of large risks insurance policies. The rationale is that the parties on large risks insurance have economic power and technical capacity, requiring less regulatory intervention. The proposal emphasizes contractual freedom, good faith, clarity and encouragement to alternative dispute resolutions. Further, it eliminates the need of registration of the wordings, aiming greater flexibility and allowing room for innovation.

The rule under discussion provides for the following classes as large risks: D&O, Oil Risks, Operational Risks, Global Banks, Aviation, Stop Loss, Nuclear and Port Operators. For other classes, they can be classified as large risks when the Maximum Insurance Limit is greater than BRL 20 million (currently aprox. USD 4 million), or when the total assets exceed BRL 27 million (currently aprox. USD 5,4million) or gross annual revenue exceeds BRL 57 million (currently approx. USD 11.4 million).

It is still unknown when the new rules will be issued in their final version. In any event, the market sees the simplification and deregulation of the sector as a very positive sign of maturity and growth.