Insurance Supervision: Brazil

The Brazilian insurance market, the largest in Latin America, has faced challenges related to market conduct and consumer protection. Despite its size, with over 122 insurance companies, 130 reinsurance companies, and 960 healthcare operators, the market suffers from low insurance penetration, macroeconomic vulnerabilities, and a complex regulatory environment. Additionally, the supervisory landscape is fragmented, with multiple regulatory bodies (CNSP, SUSEP, CNPC, ANS) overseeing different aspects of the insurance sector, leading to inconsistent market conduct practices. The UNDP recognized the need for a comprehensive review of Brazil’s insurance market conduct to ensure fair treatment of consumers and alignment with international standards. With technological changes introducing new conduct challenges, there was a growing need to enhance oversight practices, especially concerning the fair treatment of customers and minimizing reputational risks for insurers and intermediaries.

Leading financial insurance and risk experts collaborated under the OTS-funded project to conduct a thorough review of the Brazilian insurance market conduct. The approach was twofold:

The project yielded valuable insights into the strengths and weaknesses of Brazil’s insurance market conduct framework. Key recommendations included adopting more forward-looking and outcome-based supervisory practices to replace traditional compliance-based approaches. Emphasis was placed on integrating conduct risk management with prudential supervision to address the evolving challenges posed by technological advancements and market shifts. As a result of the project, Brazilian insurance supervisory staff gained enhanced capacity to enforce market conduct standards, fostering greater consumer trust and industry resilience. The collaboration also laid the groundwork for continuous improvement in market conduct supervision, aligning Brazil's practices with global best practices and ensuring a robust insurance sector in the face of future challenges.