The Chamber of Deputies recently approved the Legal Framework for Insurance, a bill that promises to change the way insurance is contracted, paid for and canceled in the country. The initiative, which aims to bring ease and greater contractual clarity, may displease insurance companies and, consequently, affect the beneficiary.
Bill 2597/2024 is an attempt to update and organize the rules on insurance contracts, which are currently scattered across various rules and regulations. The aim is to bring more information and balance to relations between insurers and insureds, since the current legislation is often considered confusing, generating uncertainty for both those who contract and those who offer the product.
Among the proposed improvements are consumer protection, with the end of unilateral cancellation of contracts – except in cases provided for by law – transparency, with clear rules for risk analysis and definition of insurance conditions, speed, with new deadlines for rejecting proposals and paying indemnities, and access to justice, with the forum for disputes preferably at the domicile of the insured or beneficiary, facilitating conflict resolution.
On the other side of the coin, the Insurance Legal Framework could increase insurers’ operating costs, with possible passing on of costs to the beneficiary or the creation of new, more expensive products. In addition, as with any other transition, there is time for adaptation, and in this window, it is possible that there will be confusion and even a temporary increase in litigation while the new rules are not consolidated. Another sensitive point is the interpretation of the new rules. Some of them, despite the intention of clarity, still leave room for legal debates that can lead to lawsuits.
To minimize these possible negative impacts, one of the solutions is to create a longer transition period, with technical support for insurers and consumers, avoiding sudden increases in costs and helping the parties to understand the new rules.
In addition, a possible complementary regulation could bring more detail to points that are still considered vague, ensuring that the objectives of the legal framework are achieved without harming either the insurer or the insured.
As a result, companies and consumers will be able to take out insurance with greater confidence and significant benefits following the implementation of the Insurance Legal Framework. It is worth noting, however, that the change also requires attention in order to understand how the application can impact costs and the supply of products on the market. Knowing that the rules are clear and that the contract is supported by modern legislation, it is hoped that conflicts and litigation will be reduced, which will make the sector more efficient and even more attractive for investment.
