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.
— Brazil —
resilience. compliance. innovation.
Strengthening Brazil’s Insurance Market Conduct: Office of Technical Assistance, US Treasury
"Culture and conduct are of increasing importance for insurance supervision. Both prudential and conduct supervisors look for a more holistic approach across prudential and market conduct approaches." — IAIS, 2022
Challenge
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.
Strategy
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:
- Benchmarking Against International Best Practices: The project involved a comparative analysis of Brazil’s market conduct practices against international benchmarks, particularly those set by the Insurance Core Principles (ICP-19) of the International Association of Insurance Supervisors (IAIS). The United Kingdom’s model was used as a reference, highlighting how the Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA) maintain high standards in consumer protection and market integrity.
- Engaging Local Supervisory Bodies: The experts engaged with supervisory staff from SUSEP and other regulatory bodies to evaluate existing market conduct practices. Through workshops and collaborative sessions, they examined current policies, guidelines, and directives, addressing gaps and identifying areas for improvement. The focus was on fostering a holistic approach to conduct risk management and building a resilient and transparent insurance sector.