MINISTRY OF FINANCE Superintendence of Private Insurances (SUSEP)

Transcription

1 MINISTRY OF FINANCE Superintendence of Private Insurances (SUSEP) SUSEP Circular Letter nr. 392 of 16 th October, It provides for operational procedures for issuance of insurance in foreign currency and for contracting of insurances abroad, and takes other actions. THE SUPERINTENDENT OF THE SUPERINTENDENCE OF PRIVATE INSURANCES - SUSEP, as provided for in art. 36, items b and h of Decree-Law nr. 73 of 21 st November 1966, in Complementary Law nr. 126, of 15 th January, 2007, in art. 12 of National Council of Private Insurances (CNSP) Resolution nr.197, of 16 th December, 2008, and considering what is included in the SUSEP Proceeding nr / , HEREBY RESOLVES: Article 1 - To provide for operational procedures to be complied with for issuance of insurance in foreign currency and for contracting of insurance abroad. TITLE I CONTRACTING OF INSURANCE IN FOREIGN CURRENCY Chapter I CLASSES, SUB-CLASSES AND LINES FORESEEN Article 2 - The issuance of insurance in foreign currency in the Country may be made when the risk pertains to one of the following classes, sub-classes or lines: I - Export credit; II - Aviation; III Nuclear hazards; IV - Satellites; V - International transport;

2 VI - Marine hulls, in the case of transatlantic liners, coastal ships, canal vessels, platform supply vessels or vessels owned by Brazilian shipping companies registered in the Brazilian Special Register - REB; VII Oil risks; VII - Civil Liability: a) For actions taken by directors, officers and/or administrators - (D & O), where the legal entity that the insured represents issues certificates of deposit of shares or bonds abroad; b) Green card; c) Carrier s civil liability for international travels - RCTR-VI; d) General for products abroad; e) General for recall of products abroad, and f) Of hangar. IX - Other classes, sub-classes or lines referring to: a) Equipment leased or assigned to third parties where the lessor or ceding party is a legal entity insured incorporated abroad; b) machinery and equipment, in the case of transatlantic liners, coastal ships, canal vessels, platform supply vessels or vessels owned by Brazilian shipping companies registered in the Brazilian Special Register - REB; c) Construction, renovation or replacement of vessels or aircrafts as well as their components, which takes place in the Country on behalf or by order of a natural person or legal entity residing or domiciled abroad, or by a national company, provided that it is supported by an offshore financing agreement; X - Blanket insurance of the port operator; XI - Engineering risks insurance, related to civil works under construction and/or installations and assemblies, which takes place in the Country on behalf or by order of natural person or legal entity residing or domiciled abroad, or by a national company, provided that it is supported by an offshore financing agreement; XII - Insurances of Itaipu Binacional hydroelectric power station, when included in the agreement for equal power distribution between Brazil and Paraguay; abroad; and XIII Performance bond when the borrower or the insured is domiciled

3 imports. XIV - Insurance of goods, which replacement or repair depends on 1 º - In the event that the contracting of insurances covering simultaneously other risks at the same time, besides imported goods, the issuance in foreign currency is allowed only in cases where the amount of imported goods covered by the policy represents at least fifty percent (50%) of the sum insured afforded. 2 Whenever the contracting of insurance involves one or more subclasses or lines of the same class under this article, it may be fully afforded in foreign currency. Article 3 - The issuance of a policy in foreign currency in the classes, sub-classes or lines of insurance set forth in the regulations in force is subject to the following provisions: I The mere accounting of the policy to a particular class is not an evidence of its regularity. II - SUSEP may, at any time, require a supporting document that the policy effectively pertains to the class. III - Equipment and support vehicles attached to insurance policies pertaining to any of the classes, sub-classes or lines of insurance covered by the regulations in force are not automatically classified as pertaining to the class, and therefore the provision in Article 5 shall be complied with. Article 4 In case of wrongful classification and subsequent incorrect accounting on the classes, sub-classes or lines of insurance referred to in the foregoing article, the insurance company shall, within the term determined by SUSEP, make the appropriate corrections and issue the respective endorsement in national currency, according to the exchange rate of the date of execution of the agreement, at no additional cost to the insured and without prejudice of administrative penalties arising therefrom. Chapter II CLASSES, SUB-CLASSES AND LINES FORESEEN Article 5 - The issuance of a policy in foreign currency on classes, subclasses or lines other than those as provided for in Article 2 hereof may be made, provided that the respective contracting is deemed necessary by virtue of the object insured or of the insurance goal. Sole Paragraph. The insurance company shall keep in file the documentation which justifies the contracting as in the head of this article.

4 Article 6 - For the purposes of the foregoing article, it is hereby established that it is not a sufficient justification for policy issuance in foreign currency, without prejudice to other situations: I - The territorial scope of cover not limited to national territory; II - The beneficiary be an individual or legal entity domiciled abroad; III - If the insured is a multinational company, to be a requirement of the main office headquartered abroad; IV - The placement of corresponding reinsurance abroad; V - The goods produced in national territory be transacted or negotiated at a price in foreign currency; VI - The production be object of export; and VII - The intention to avoid the devaluation of property. Article 7 The insurance company will refer to SUSEP, up to the tenth (10) day of each month, according to correspondence which form is attached hereto as Schedule I, the list of policies in foreign currency, by class of business, issued the previous month. Sole Paragraph. The provision in the head of the article applies both to new issuances of insurance and renewals. Article 8 - In case it is found that the issuance of policy in foreign currency, including classes, sub-classes or lines other than those provided for in Article 2 hereof, was in disagreement with the provisions of Article 5, the insurance company shall, within the term determined by SUSEP, make the appropriate corrections and issue respective endorsement in national currency, according to the exchange rate of the date of execution, at no additional cost to the insured and without prejudice of administrative penalties arising therefrom. TITLE II CONTRACTING OF INSURANCE ABROAD Article 9 - The contracting of insurance abroad is restricted to cases provided for in CNSP Resolution nr. 197/2008. Article 10 Subject to the foregoing article, SUSEP may, at any time, request the insured and/or respective broker the documents evidencing the compliance with the regulations in force for the contracting of insurance abroad.

5 Sole Paragraph. Failure to submit the documentation described in the foregoing article binds the insured and/or its intermediary, when residing or domiciled in Brazil, to the applicable penalties, under the laws and regulations in force. Article 11. For contracting related to risks for which no cover has been afforded in the Country, SUSEP may, at any time, require that the insured and/or broker submits the following documents: I - A copy of consultations made at least to ten (10) Brazilian insurance companies operating in the business of insurance where the risk is included, and the consultations shall be the same for all insurers; II - A copy of the documents issued by the insurers mentioned in the foregoing section, with its letter of denial for the insurance cover, with the justification presented for the decision; III - A copy of the consultation made to the insurer abroad, along with a sworn translation into the national language, in the same terms of those made to the national insurance companies. 1 º - In the event that there are not at least ten (10) Brazilian insurance companies operating in the business of insurance where the risk is included, in order to meet the provision of section I of this article, all the insurers operating in that class shall be consulted. 2 - For purposes of compliance with the provision of Section II hereof, the letter of denial of cover on the grounds of lack of information provided by the applicant shall not be considered. Article 12 Alternatively to the documents required in sections I and II of the foregoing article, in order that SUSEP accepts the letter of denial issued by a representative trade association, under 2 of Article 6 of CNSP Resolution nr. 197/2008, the following criteria shall be met: I - Consultations shall be made by a representative trade association to all the Brazilian insurance companies, within one (1) business day, as from the request for quotation by the insured, and the records of the consultations shall be kept by said association; II - The consultations referred to in the foregoing section shall be sent to the technical director in charge of insurance companies, through the channel indicated by him/her, and they shall contain such terms, conditions and information necessary for risk analysis, ensuring the equitable treatment to all companies consulted; III - The issuance of a letter of denial by the representative trade association may only occur if no insurance company has made a statement as regards the interest in taking the risk, or if there are only negative answers made by the insurance companies consulted.

6 Sole Paragraph. Once the period of acceptance provided for in specific regulation for insurers ends, the representative trade association shall submit, within three (3) business days, the letter of denial referred to in the head of this article, or report to inform the insurers interested in accepting the risk. Article 13 - For the recognition of the representative trade association under 3 of Article 6 of CNSP Resolution nr. 197/2008, the interested parties shall file at SUSEP a notice, pledging to meet the following requirements: I - To publish monthly statistics of consultations made under the form attached hereto as Schedule I; II - To make available any and all information in regard with the consultation procedure mentioned in Article 10, in order to be required by SUSEP; updated; III - To keep records of all Brazilian insurance companies constantly IV - To use a system that requires digital certification for the mailing of consultation under section I of Article 10 to the insurers, so as to assure the integrity of the referred consultations, identity of the sender, receipt by recipients and record of the date and time of mailing. 1 º - The statistics referred to in section I hereof shall be posted on the official website of the association on the Internet by the tenth day of the month subsequent to the end of the procedures mentioned in the foregoing article. 2 - The digital certificate referred to in section IV hereof shall be of the A3 type, issued by an association accredited by the Brazilian Public Key Infrastructure (ICP-Brazil). 3 - A list of representative trade associations recognized by the Government Agency will be made available on the SUSEP website on the Internet. 4 - Failure to meet any requirements set forth in this article shall imply the non-recognition by SUSEP of the representative trade association. Article 14. If requested by SUSEP, the insured and/or broker shall submit evidence that the insurance contracted abroad was the object of an international agreement ratified by the Brazilian National Congress. Article 15. For the purposes of the provisions set forth in 2 of Article 11 of the Brazilian Law nr of 9 th January 1997 (hull, machinery and civil liability insurance coverage for vessels registered in the Brazilian Special Register - REB) and in section V of article 5 of CNSP Resolution nr. 197/2008 specifically for cases in which the market does not offer prices compatible with the international market, SUSEP may, at any time, require that the insured and/or broker submit the following documents:

7 I - A copy of consultations made at least to ten (5) Brazilian insurance companies operating in such class of business, and the consultations shall be the same for all insurers; II - A copy of documents issued by the Brazilian insurance companies along with their quotation for insurance cover; III - A copy of the consultation made to the insurer abroad, along with a sworn translation into the national language, in the same terms of those made to the national insurance companies. IV - A copy of the consultation of revaluation by the Brazilian insurance companies, and their respective formal letters of denial. Sole Paragraph. The terms and conditions of the quotation mentioned in section III are required to be resubmitted to the Brazilian insurance companies for revaluation. Article 16. The contracting of insurance abroad to cover risks abroad granted to legal entities shall be informed to SUSEP within 60 (sixty) days from the effective date of risk in terms of correspondence as per the form attached hereto as Schedule III. TITLE III MISCELLANEOUS Article 17. The renewal of the insurance policy in foreign currency, previously authorized by IRB-Brasil Re, which does not comply with Article 2, is subject to the terms under Articles 5 and 6 hereof. Article 18. The insurance company will be subject to the penalties provided for in specific regulations in case of issuance of a policy in foreign currency that is not in accordance with the provisions hereof. Article 19. The insured and/or its intermediary, when domiciled or residing in Brazil, will be subject to the penalties provided for in specific regulations in case of contracting of insurance abroad which is not in accordance with the provisions set forth herein. Article 20 - The application of penalties may occur even for the cases where the effectiveness of the contract has already reached the end. Article 21. For insurances contracted abroad, as provided for in laws and regulations in force, SUSEP shall not be in charge of intervening in occasional disputes. Article 22. The documentation referring to the first contracting or renewal of insurance in foreign currency, even if previously authorized by IRB-Brasil

8 Re, shall be kept at the disposal of SUSEP by the insurer for a period of five (5) years after the expiration date, without prejudice of periods other than those required by other regulating bodies. Article 23. The documentation referring to the first contracting or renewal of insurance abroad, even if previously authorized by the IRB-Brasil Re, shall be kept at the disposal of SUSEP by the insurer for a period of five (5) years after the expiration date, without prejudice of periods other than those required by other regulating bodies. Article 24 - The renewal of insurance contracted abroad, prior to publication of Complementary Law nr. 126/2007, shall only be regular if it is found that the insurance falls into any of the cases under the laws and regulations in force. Article 25 Provided that it is consistent with laws and regulations in force, the direct acceptance of risks from abroad on classes in which the insurer is authorized to operate in Brazil is not subject to prior authorization from SUSEP. Article 26. For the cases described herein, the regulation from the National Monetary Council and the Brazilian Central Bank shall be complied with, without prejudice to any other ones, if applicable. publication. Article 27 - This Circular Letter shall become effective on the date of its ARMANDO VERGILIO DOS SANTOS JÚNIOR Superintendent