2012年-世界发展银行全球_Financial_Sector_Assessment_Program___Brazil_-_IAIS_Insurance_Core_Principles_73页_1mb

Detailed Summary of the ICPs Assessment for Brazil (June 2012)

Core Content

This document presents a detailed assessment of Brazil's compliance with the Insurance Core Principles (ICPs) under the 2011 version of the IAIS standards. The assessment was conducted as part of the 2012 Financial Sector Assessment Program (FSAP) and is based on the regulatory framework, supervisory practices, and market conditions as of March 2012.

Main Findings

Insurance Sector Overview

• The Brazilian insurance sector is a significant part of the financial system.
• Assets managed by the sector supervised by SUSEP more than doubled over the last five years, reaching US$225 billion at the end of 2010, or 9.5% of GDP.
• It is the largest insurance sector in Latin America, accounting for 50% of the region’s gross written premium and 1.5% of global premium.
• In 2010, the total written insurance premium amounted to US$75 billion.
• The market is dominated by insurers affiliated with large banking groups, which together control over 80% of the market share in terms of assets.
• Broker-dominated distribution is a key feature, with around 88% of the insurance business sold by 70,000 active brokers.

Regulatory and Supervisory Framework

• The CNSP (National Council for Private Insurance) is the ultimate supervisory authority, reporting to the Ministry of Finance.
• SUSEP (Superintendência of Private Insurance) is the executive and supervisory body, responsible for regulating and supervising the insurance sector.
• CMN (National Monetary Council) provides technical input on investment requirements, which are transparent and aimed at diversification, safety, profitability, solvency, and liquidity.
• Regulatory requirements are largely in line with international standards, particularly in licensing, control changes, and suitability.
• However, improvements are needed, especially in foreign participation and transparency in the licensing process.

Solvency and Financial Resilience

• The solvency ratio of the insurance industry is strong, with life insurers maintaining an average margin of 250% above regulatory requirements and nonlife insurers showing 90% above.
• The risk ratio (capital and surplus to underwritten premium) is around 1.7, and 8.25% of total assets are allocated to capital and surplus, which is within international norms.
• Investments are conservative and short-term, mainly in fixed income instruments and government bonds.
• Foreign investments are largely prohibited, except for currency matching instruments and investment funds.
• Securities lending is not allowed for assets backing technical provisions, and 100% collateral is required for other assets.

Consumer Protection and Governance

• Consumer protection has made progress, with an effective ombudsman system and 30-day claim resolution.
• However, there are no detailed requirements for the type of information consumers should receive before, during, and after purchasing insurance.
• Disclosure of commissions and conflict of interest is lacking.
• Corporate governance is not fully developed, and enterprise risk management (ERM) is not required for solvency purposes.
• Some insurers have sophisticated ERM systems, but others are at an early stage of development.

Reinsurance and Market Concentration

• Mandatory reinsurance adds cost and hinders market development.
• Reinsurance supervision is complex and currently restricts the types of cessions allowed.
• SUSEP recommends removing such restrictions and moving toward a risk-based regime.
• Market concentration is high, with large banking groups controlling a significant share of the market.

Broker Supervision and Disclosure

• Broker supervision is thin, with no requirement for brokers to submit financial or operational information.
• SUSEP does not perform regular onsite inspections but analyzes complaints and conducts inspections as needed.
• Insurance brokers are not required to have professional liability insurance or to be affiliated with a self-regulating entity.
• Only reinsurance brokers are required to have professional liability insurance, and the intermediation clause is present in reinsurance contracts.

Recommendations

• Strengthen SUSEP's operational independence by introducing a transparent appointment procedure, requiring technical input on regulations, and granting autonomy in budget use.
• Develop group supervision by defining financial groups and implementing consolidated supervision, including ERM and capital requirements at the group level.
• Improve broker supervision by requiring self-regulation, affiliation with a self-regulating entity, and adding the intermediation clause for insurance brokers.
• Enhance consumer protection by introducing transparency requirements, clear disclosure of conflicts of interest, and simple products for low-income consumers.
• Modernize capital requirements by incorporating risk-sensitive surcharges for nonlife underwriting, credit, and operational risks.
• Formalize cooperation with foreign jurisdictions by signing multilateral MoUs and improving cross-border crisis prevention and macroprudential surveillance.

Key Information

• Regulatory bodies: CNSP and SUSEP are the main regulators, with CNSP setting policy and SUSEP enforcing it.
• Market structure: Dominated by banking groups, with brokers playing a central role in distribution.
• Growth drivers: Financial and currency stability, economic growth, credit availability, and tax incentives have driven growth.
• Solvency and profitability: High profitability (ROE above 20% for life, 47–34% for nonlife) and strong solvency margins.
• Challenges: Market concentration, thin broker supervision, lack of consumer protection requirements, and weak group supervision.

Conclusion

Brazil has made significant progress in aligning its insurance sector with the ICPs, particularly in solvency, profitability, and consumer protection. However, there are notable gaps in broker oversight, group supervision, and transparency in regulatory processes. The regulatory framework needs further modernization to ensure risk-sensitive supervision, effective ERM, and enhanced consumer protection. Strengthening SUSEP's independence and international cooperation are also recommended to support the long-term development and stability of the sector.