By virtue of SBS Orders No. 808-2019 and 809-2019, the Regulation of the Registry of Insurance Brokers, Claims Adjuster Experts, Reinsurance Companies from Abroad and of Cross-Border Insurance Activities (the “Registration Regulation”), and the Regulation of Insurance Brokers and Claims Adjuster Experts Supervision and Control (the “Supervision Regulation”) were approved, respectively. These Orders adopts relevant amendments impacting on the insurance brokers, mainly, in regards to minimum obligations to policyholders, insureds, beneficiaries and interested third parties.
The most important amendments are detailed as follows:
1. Further Control by the Superintendency of Banking, Insurance and Private Pension Fund Management Company (SBS). A segmentation[1] criterion has been inserted. It will be applied to brokers in accordance to their annual operating incomes. Companies under certain segments shall present information about dividends or any kind of profits applications to the SBS. The SBS shall suspend the respective agreements in case of observations. Furthermore, for certain segments, brokers shall implement good corporate governance practice as well as a Code of Ethics and Conduct, either individual or group, indicating the criteria of enforceable professional liabilities.
2. Contracts of Referencing. Contracts of Referencing are regulated thereof, establishing its minimum content and the broker’s obligation to inform referring party’s details to the policyholder, and to keep a record of these contracts that will be available to the SBS.
3. Representation of the Policyholder or Insured. Documents and proceedings carried out by insurance brokers on behalf of the policyholder and/or insured are detailed, as well as the content of the appointment letter containing an exhibit of brokers’ obligations and information about the liability policy hired by brokers.
4. Agency Agreement. The Agency Agreement as an insurance brokerage is excluded. The Agency Agreements currently in force shall be adapted to the Insurance Marketing Regulation (SBS Order No. 1121-2017).
5. Portfolio Transfer. Portfolio transfer between brokers is regulated. Brokers shall communicate the portfolio transfer to other broker to the SBS within 20 business days by attaching a copy of the corporate governing body’s resolution approving this transfer.
Note that the Regulation of the Registry of Insurance Brokers, approved by SBS Order No. 1797-2011, is still in force in regards to supervision and control activities until the Supervision Regulation will come into effect on August 1, 2019. The Registration Regulation is already in force.
