Resolution No 494/2026: Brazil’s New Reinsurance Regulatory Framework

Following Public Consultation No. 14/2025, which proposed significant changes to the regulation of reinsurance operations in Brazil, we would like to provide a brief update on the publication of CNSP Resolution No. 494/2026 (the Resolution).

The Resolution was published on 21 July 2026 and will enter into force on 2 January 2027.

The final text largely preserves the structure and purposes reflected in the public consultation. However, some noteworthy amendments were introduced in the final version, as summarised below.

Extension of the Contract Formalisation Period

One welcome amendment is the extension of the deadline for formalising reinsurance contracts from the 60-day period proposed in the consultation draft to 90 days from the inception of coverage.

Reinforced Regulatory Position on Claims Control and Claims Cooperation Clauses

The Resolution further strengthens SUSEP's position that responsibility for claims handling and settlement must remain exclusively with the cedent (insurance company or reinsurer, for reinsurance and retrocession, respectively) and does not clarify market discussions regarding the possibility (or not) of having claims control and claims cooperation clauses. Although the Resolution stops short of expressly prohibiting all forms of claims cooperation, the revised wording provides a materially stronger basis for regulatory scrutiny of traditional claims control, consent-to-settle and similar provisions.

We expect this issue to remain one of the most closely debated aspects of the new framework. Insurers and reinsurers may therefore wish to review existing treaty and facultative wordings to assess their compatibility with the new requirements.

In addition, the Resolution expressly provides that:

• the cedent retains sole and exclusive responsibility towards policyholders and beneficiaries;
• decision-making authority concerning the performance of the underlying insurance contract cannot be transferred to the reinsurer; and
• contractual provisions or practices that condition, restrict or otherwise interfere with the cedent's responsibilities, including in relation to claims handling and settlement, are prohibited.

In theory, such responsibilities are already provided by Complementary Law 126/2007, but the new regulation brings them with a firm obligation for the cedents. 

Retention of the Capacity Consultation Mechanism

While the concept of a "capacity consultation" no longer appears as a defined term, the underlying requirement has been preserved. The Resolution continues to permit placements with reinsurers not authorised in Brazil only where sufficient capacity is unavailable from authorised local and foreign reinsurers, with such unavailability to be demonstrated through a consultation process to be further regulated by SUSEP.

Increased Focus on Risk Transfer Governance

The Resolution places significant emphasis on governance arrangements relating to risk transfer.
Insurers, local reinsurers, insurance cooperatives and certain other regulated entities will be required to maintain a formal risk transfer policy addressing, among other matters:

• counterparty selection and monitoring;
• concentration risk management;
• intra-group transactions;
• spiral risks;
• credit and liquidity exposures; and
• consistency between underlying insurance cover and corresponding reinsurance protection.

These provisions reflect a broader governance and supervisory focus than that adopted under the current regulatory framework.

New Requirement for Facultative Reinsurance Contracts

The Resolution introduces a specific requirement that facultative reinsurance contracts address the manner in which reinsurers will be notified when the cedent becomes involved in litigation seeking the revision, interpretation, or enforcement of the underlying insurance contract.

Although this kind of provision would only be established by federal law, this is a new and relatively prescriptive regulatory requirement which must be considered when updating standard facultative reinsurance documentation.

Jurisdiction and Arbitration

Resolution reinforces the requirement that reinsurance contracts covering risks located in Brazil must be governed exclusively by Brazilian law. Also, the Resolution reproduces legal concept that judicial proceedings between insurers, reinsurers and retrocessionaires that may directly affect the performance of Brazilian insurance contracts to be conducted in Brazil, but the new regulation brought also arbitration proceedings to this same concept, enlarging legal grounds and providing a new prohibition to reinsurance and retrocession dispute resolutions.

This represents a sadly departure from previous regulations, which contained an express carve-out for arbitration agreements, and may give rise to important discussions regarding the compatibility of certain international arbitration arrangements traditionally used in the reinsurance market.

Other Important Matters 

Aside from the points highlighted above, some changes brough by the new Resolution can be highlighted, including:

• the recognition of reinsurance contract formation by deemed acceptance following the reinsurer's silence;
• provisions regarding reinsurance recoveries in advance;
• the requirement to establishing procedures for reinsurance recoveries within reinsurance contracts;
• the justification-based approach applicable to elevated levels of reinsurance and retrocession cessions; and
• amendments relating to coinsurance arrangements and insurance placed abroad.

The new reinsurance regulatory framework depends on the issuance of supplementary regulations by SUSEP which is expected to cover: (i) the submission and acceptance of reinsurance proposals; (ii) the preferential offering of risks to local reinsurers; (iii) evidence of insufficient capacity available from local and foreign reinsurers for purposes of transferring risks to reinsurers not authorized to operate in Brazil; (iv) the placement of insurance abroad; and (v) the calculation of reinsurance and retrocession cession percentages.

On the meeting of SUSEP’s Board of Directors on 18 September 2026, the proposed draft resolution to be put to public consultation has recently been submitted to their review.

We remain available to discuss any of the above matters and their potential impact on the operations of insurers, reinsurers and other market participants.”

This article was written by: Marcella Hill, Vanessa Abreu, Jaqueline Suryan, Mariana Cavalcanti Jardim and Lorena Cozer. Please get in touch if you have any questions.