RBRSi 1- 9 Ilan Goldberg.PMD - Escola Nacional de Seguros

Reinsurance and Development: a Study of the Outstanding Events 

of the Past Ten Years and Prospects for the Upcoming Years 

Ilan Goldberg 

LLB from the Federal University of Rio de Janeiro (UFRJ), pos-graduated studies in Corporate Law at 

IBMEC-RJ and Master’s degree in Regulatory and Claims Law from Candido Mendes University-RJ. 

Member of the International Insurance Law Society (AIDA) and the Brazilian Insurance Law Institute. 

Lawyer and partner in Chalfin, Goldberg & Vainboim Legal Associates. 

ilan@cgvadvogados.com.br 

Summary 

This paper addresses the relationship between the development of the Brazilian economy and the demand 

for reinsurance. It first examines information published by the official Brazilian reinsurer, IRB-Brasil Re, 

over the past ten years. It then analyzes several recent key court decisions involving efforts by the Brazilian 

government to open the reinsurance market and the effects of these decisions on the current legal climate 

in the country. Finally, it proposes some options for opening the reinsurance market and making it more 

flexible, thereby better enabling it to meet the demands of the upcoming years. 

Key Words 

Reinsurance; development; monopoly; regulatory framework; safeguards. 

Contents 

1.Introduction; 2. 1995 to 2005 – a decade of considerable development by the Brazilian reinsurer agency; 

3. Important legal events; 4. The coming years – a new regulatory framework for the reinsurance market 

– proposals; 5. Conclusion; 6. References. 

RBRSi, Rio de Janeiro, Brazil, v. 1, n. 1, p. 193-208, 2007 193

Sinopsis 

Reaseguro y desarrollo: un estudio acerca de los principales factores ocurridos en los últimos 

diez años y las perspectivas para los próximos años 

Ilan Goldberg 

Graduado en Ciencias Jurídicas por la Universidad Federal de Río de Janeiro (UFRJ). Posgraduado en 

Derecho Empresarial por el IBMEC-RJ. Cursando Master en Derecho de la Regulación y Competencia 

por la Universidad Candido Mendes. Miembro de la Asociación Internacional de Derecho de Seguro – 

AIDA, Socio efectivo do IBDS – Instituto Brasileño de Derecho del Seguro. Abogado, Socio de Chalfin, 

Goldberg & Vainboim Advogados Associados 

ilan@cgvadvogados.com.br 

Resumen 

Este estudio presenta la asociación entre el desarrollo de la economía brasileña y la demanda por 

reaseguro. Son examinados los resultados publicados por el reasegurador oficial brasileño, IRB-Brasil 

Re, durante los últimos diez años. A continuación, son analizadas algunas recientes e importantes 

decisiones judiciales involucrando esfuerzos por parte del Gobierno Brasileño para cuidar de la apertura 

del mercado de reaseguros y sus respectivos efectos. Finalmente, son presentadas algunas propuestas 

para la apertura del mercado de reaseguros, haciéndolo más flexible para ir al encuentro de las necesidades 

que vendrán en los próximos años. 

Palabras-Clave 

Reaseguro; desarrollo; monopolio; marco reglamentario; salvaguardas. 

Sumario 

1. Introducción; 2. 1995 a 2005 – una década de considerable desarrollo por parte del órgano reasegurador 

Brasileño; 3. Hechos jurídicos relevantes; 4. Los años venideros – un nuevo marco reglamentario para el 

mercado de reaseguros – propuestas; 5. Conclusión; 6. Referencias bibliográficas. 


1. Introduction The study of the role of reinsurers in Brazil over the last decade, along 

with the prospects for the future, is surely inextricably intertwined with 

the country’s development. 

Whatever the rationale of the infrastructure devoted to heating up the 

Brazilian economy, i.e., energy (oil, gas, electricity, nuclear), 

telecommunications, industry, agriculture, transportation (maritime, land 

and air) or service delivery, there can be no doubt that reinsurers have 

played a fundamental role over the last decade, and this should intensify 

in coming years. 

It has become necessary to reflect on the way the Brazilian government 

has regulated the reinsurance market which in practice 1 , is still a 

monopoly. 2 In the twenty-first century, under the aegis of a totally globalized 

world, the economic scenario which prevailed in 1939, when the then 

called IRB–Instituto de Resseguros do Brasil (Brazilian Reinsurance 

Institute) 3 was created, is no longer in place. 

The pressure exercised by an interventionist government acting directly 

through a monopolistic regime in the economic sectors classified as 

strategic 4 made way for a new economic model, where the role of the 

government stops being the “main actor” to become the “director”, i.e., it 

stops being an executive government to become a regulatory government. 

1 They say “in practice” because in theoretical terms, after the final determination on Constitutional Lawsuit (ADIN) 

2223-7, filed by the Workers’ Party (PT), Law 9.932, of Dec. 20, 1999, whose enforcement had been suspended by a 

preliminary injunction granted during the lawsuit (ADIN) resumed its force again. This law provides for the transfer of regulatory, 

normative, administrative and judicial powers from IRB-Brasil Resseguros S.A. to the Superintendence of Private Insurance 

(Susep). However, although law 9.932 is fully in force, this transfer of powers to Susep is yet to take place. 

2 International Insurance Law Association -AIDA news release No. 554, of Jan. 19, 2005 features the following: “Open 

Markets and Deregulation: The Susep Superintendent René Garcia returned from a European trip fully convinced that 

there is no more room for an excessive presence of the government as a regulator or for rigid models for insurance 

matters, including reinsurance matters. In Europe, insurance companies have adopted the use of tools that help avoid 

the iron hand of regulatory agencies. Garcia wants to speed up self-regulation, but he warned insurance executives 

this can only be feasible with the involvement of insurance companies, that is, insurance companies must follow codes 

of ethics or approve rules for procedures to be observed by all, in order to ensure transparency in the market and 

consumer protection.” 

3 Decree No. 1.186 of April 3, 1939 created the Instituto de Resseguros do Brasil (Brazilian Reinsurance Institute). 

Provisional Measure 1.578, of June 18, 1997, later enacted as Law. 9.482,of Aug. 13, 1997 changed the Instituto de 

Resseguros do Brasil (IRB) into a corporation with a collegial board of directors. On June 30, 1997, the name of the 

Instituto de Resseguros do Brasil was changed into IRB–Brasil Resseguros S.A. (IRB–Brasil Re) [IRB–Brazilian 

Reinsurance Corporation]. 

4 Following are excerpts from the Federal Constitution of Nov. 10, 1937: “Art 16 – The Union is vested with exclusive 

powers to legislate on the following matters: (...) VI – federal finance, currency, credit, the stock exchange, and banking 

matters; VII – interstate and foreign trade, exchange and money transfers to foreign countries; VIII – monopolies and 

industrial standardization; IX – weights and measures, models, titles and warrants for precious metals; X – postal services 

and radio broadcasting; XI – communications and cross border and interstate railway, water, air, and highway 

transportation systems; XII – cabotage trade in goods transported by domestic vessels; XIII – customs and warehouses; 

maritime, port, and river patrolling; XIV – federally-owned assets, mines, metallurgy, hydraulic energy, water, forests, 

hunting and fishing; XV – unification and standardization of electric power establishments and installations, as well 

safety measures to be adopted by the electric power industries, high-voltage power line systems that cross the borders 

between states; XVI – civil law, trade law, airspace law, labor law, penal law, and procedural law; XVII – insurance 

regimes, and insurance regime oversight; XVIII – playhouse and movie theater regimes; XIX – cooperatives and 

institutions for holding and investing savings; XX – copyrights; the press; rights of association and assembly; the right 

to freedom of movement within and in and out of the country; matters of civil status , including marital status, birth 

certificates and name changes; XXI – patent rights, as well as protection of industrial models, trademarks and other 

designations for goods; (...)”. 


Examples of this paradigm change have already been observed in several 

sectors in the country, such as: energy, telecommunications and oil, 

among others, which were the subject of Law 9.491 of September 9, 

1997, that enacted the National Privatization Program (PND). IRB–Brasil 

Resseguros S.A. (IRB–Brazilian Reinsurance Corporation), in particular, 

was included in the referenced program under Decree no. 2.423 of 

December 16, 1997. 

The reinsurance industry in the country expects to be subjected to a new 

regulatory regime 5 in 2007, as a result of the monopoly exercised by IRB- 

Brasil Resseguros S.A. being made more flexible. With the passage of Bill 

249 of a Complementary Law, which is well along in the approval process 

in Congress, Brazil will finally be in a position to develop a reinsurance 

market under constitutionally guaranteed free market conditions. 

In order to avoid anti-competitive practices, it is up to the relevant 

authorities to make every effort so that competition inaugurated be 

exercised in a guaranteed manner by the foreign and occasionally 

domestic 6 players who will act directly in the national market, and to try 

avoid disturbances resulting from proposals (legislative reforms) that are 

inherently problematic, as occurred with the Ordinary Law 9.932 of 

December 20, 1999. 7 

This initial outline of the panorama translates into: (i) heightened 

development during the last decade and (ii) excellent prospects for the 

coming years, a result of the gradual opening of the market and a 

consequent improvement in the offer of products (coverages) and services 

(regulation of losses, for example). Next, the main ideas developed in 

this study will be presented. 

5 In a Ministry of Finance study published in the newspaper O Estado de S. Paulo on Dec. 29, 2004 named 

“Microeconomic Reform and Long-Term Growth”, comments on pages 48/50 read: “3.1.3 Improving the Regulatory 

Framework for the Insurance Industry (...) Therefore, the Government included in its 2004-2005 agenda a review of 

the regulatory framework for the insurance and reinsurance industry, which was favored by an amendment to article 

192 of the Federal Constitution, by Amendment 40, of May 29, 2003, which allowed the National Financial System to 

be regulated by more than one complementary law. Establishing consumer protection as the main objective of 

governmental actions, the policy for the insurance industry will be based on three main pillars: i) institutional improvement; 

ii) improvement to the oversight system; and iii) improvements in consumer guarantees. The objective of this policy is 

removing existing restraints to the emergence of new products and services, promoting enhanced competitiveness in 

the industry, establishing improved prudential rules, and seeking improved performance of the regulatory and oversight 

agency. Today, the Instituto de Resseguros do Brasil (IRB – Brasil Resseguros S.A.) is not only in charge of market 

regulation, but also has a monopoly on reinsurance operations. However, among IRB’s shareholders are not just 

government, but the companies that are subject to oversight. Historically, IRB’s importance has been linked to the 

establishment and development of the domestic insurance market itself. But Brazil, together with Cuba and Costa 

Rica, is one of the few countries in the world having such a monopoly. This monopoly of the reinsurance market entails 

some economic barriers to sustained sectoral development: a) it creates inefficiencies in the insurance market because 

it forbids the sole reinsurer to refuse to operate with insurance companies that have operational or underwriting 

deficiencies, ultimately generating higher costs to customers; b) it discourages competition among insurance companies; 

c) it inhibits the entry of new insurance companies in the market (both domestic and foreign companies); and d) inhibits 

development of new products, particularly those which are not standardized. (...)”. 

6 The use of the term “occasionally domestic” is correct because there is no domestic reinsurer in Brazil other than 

IRB–Brasil Re, which has held the monopoly in the industry since its founding in 1939. With the opening of the market 

and the consequent absence of impediments to creating and developing new domestic reinsurers, these can compete 

on equal terms with foreign reinsurers. 

7 If the assignment of IRB’s powers to Susep had been carried out according to a complementary law, the consequences 

of the filing by PT of Constitutional Lawsuit No. 2223-7 could have been avoided. 


Initially, the study will focus on the growth of the Brazilian reinsurance 

market over the last ten years, a result of better preparation by the 

reinsurance agency and the development of the Brazilian economy. Later, 

legal developments important to the reinsurance market during the decade 

in reference will be highlighted, including Constitutional Amendment 13 

of 1996, Law 9.932/99, constitutional lawsuit (ADIN) 2223-7, filed by the 

Workers’ Party (PT), the injunction granted by its rapporteur, Minister 

Marco Aurélio Mello, its later confirmation by the full body of the Supreme 

Court, Constitutional Amendment 40 of 2003 and the later decision by 

the Minister to rule the constitutional lawsuit groundless. Following this, 

possible ways to create and apply a new regulatory framework for the 

reinsurance market in coming years will be discussed and conclusion 

will be presented in the last section. 

2. 1995 to 2005 – The larger a country’s industrial park, its financial operations, its 

a decade of requirements for energy, telecommunications, oil, supplies of diverse kinds 

considerable (food, subsidies), in other words, the higher its level of economic 

development by the development, the greater will be its demand for reinsurance. 

Brazilian reinsurer 

agency The development of an isolated argument, which views the execution 

of reinsurance contracts from the microeconomic perspective, i.e., 

only from the point of view of the reinsurance market and its 

specificities, will not allow the validation of the above assertion with 

respect to the proportionality existing between overall economic 

development – macroeconomics – and the development of the 

reinsurance market. 

Nonetheless, no great effort is required to understand the reason for the 

existence of this proportionality. To exemplify: take the telecommunications 

sector as a point of reference. Recently, Brazil underwent privatization of 

the exploitation of this sector, also as a result of the PND – the National 

Privatization Program. Before starting up their business activities, the 

groups who won the federal government tenders have faced the need to 

make heavy investments to observe the determinations issued by Anatel 

– the National Telecommunications Agency, and these involved the hiring 

of specialized labor and the acquisition of equipment needed to broadcast 

signals (antennas, transmission towers, hardware, software, licenses), 

among other elements. 

Having made all this investment, perhaps the first inquiry raised by these 

groups of investors was: how will the risks inherent to this activity, which 

will surely be very high, be underwritten? 

Responding to this question and at the same time validating the statement 

made earlier regarding the proportionality existing between economic 

development (in a global sense) and the reinsurance market, underwriting 

for these high risks would be undertaken by the official reinsurer, IRB– 

Brasil Resseguros S.A. 8 

Thus, the more the economy develops, the more resources are needed 

and the greater the risks related to this development, the more heated 

the reinsurance market will become. 9 


The figures gleaned from the annual reports 10 disseminated by IRB–Brasil 

Resseguros S.A. demonstrate the evolution that has taken place over 

the last ten years. 

In 1996, with the enactment of Constitutional Amendment 13, subsection 

II of art. 192 of the Federal Constitution of 1988 was rewritten and thus to 

permit the loosening of the monopoly which had been exercised by the 

official reinsurance agency since 1939. 

1988 was a landmark year because it was the first fiscal year in which 

IRB–Brasil Re surpassed R$ 1 billion in income from reinsurance written 

premiums. (The exact figure, according to the annual report published by 

the reinsurer was R$ 1.033 billion). Compared to 1997, the preceding 

year, growth was on the order of 10 percent. With respect to the share of 

each reinsurance line over the total collected premiums, fire insurance 

was the leader, responsible for 33 percent of the total. 

Noting the net income 11 obtained for the fiscal years 1995 (87.2), 1996 

(73.1), 1997 (51.7) and 1998 (170.4), the increasing demand for 

reinsurance is evident, especially from the year 1997 to 1998. Justifications 

for the drops occurring from 1995 to 1996, and from 1996 to 1997 are 

based in the serious financial crises on the international markets, with 

8 It should be noted that the reinsurer agency has no direct connection with policyholders. The relationships between 

policyholder vs insurer/reinsured, and insurer/reinsured vs reinsurer are separate as explained in the award-winning 

book by Rubén S. Stiglitz, (STIGLITZ, Rubens S., Derecho de Seguros, t. III, 4th ed., Buenos Aires: La Ley, 2004, 

pg. 300): “En una primera aproximación, podemos afirmar que el reaseguro es un supuesto o modalidad del seguro 

de daños por el cual el segurador/reasegurado se asegura (se garantiza), total o parcialmente, dentro de los limites 

estipulados convencionalmente, contra la aparición de un daño con motivo de tener que afrontar eventualmente las 

consecuencias dañosas de un siniestro que sufra su asegurado. De la misma definición, surge que el vínculo 

reasegurativo se halla constituido entre el segurador y el reasegurador, lo que significa que ninguna relación jurídica 

vincula al asegurado con el reasegurador. Esta solución tiene alcance normativo, a tal punto que el artículo 160, Ley 

de Seguros establece que: “El segurado carece de acción contra el reasegurador...”. A similar view can be found in 

this excerpt from the book El Control de Seguros Y Reaseguros (Natureza Y Alcance), Buenos Aires: La Ley, 2000, 

by Orlando Hugo Alfano, pg. 239: “Como sabemos, el elemento básico del reaseguro, en su sentido más estricto, es 

la efectiva transferencia del riesgo del asegurador primario a su propio asegurador, es decir el reasegurador, donde 

ambos (asegurador y reasegurador) pretenden que esta transferencia se realice mediante un precio adecuado”. 

9 An excerpt from page 4 of the excellent paper presented for the IRB 1989 “Celso da Rocha Miranda” Paper Contest 

named: “Reinsurance in Brazil: Retrospective and Prospects” by an author under the nickname “The Optimistic” shows 

concurring views: “Reviewing the past performance of the reinsurance industry in Brazil, we see that although IRB 

had been an active reinsurer in the market, together with active insurance companies, there were no great hazards to 

be insured or reinsured, such as chemical or petrochemical hazards, large steel companies, large power plants or 

offshore oil rigs, subway trains, sophisticated buildings that could challenge the technical expertise of the reinsurer or 

of the whole insurance market in assessing rates for these industrial parks. The reinsurer, in turn, was not challenged 

to know how to assess domestic market retentions of such large risks, and transfer a portion of them to foreign markets 

as a safety measure, so that the domestic insurance market is not compromised when large losses occur.. In the past, 

Brazil had no Housing Finance System nor Export Credit systems insurances to challenge the reinsurer agency to 

correct the enormous distortions currently existing in these insurance portfolios, and find new ways to make them efficient 

and profitable. Therefore, in the past, reinsurance in Brazil was easy to manage because our industrial park was small, 

and the businesses insured were also small – large grocery stores, traditional fabric plants, warehouses, small factories, 

etc.– which would not challenge sector experts to study better and more efficient plans to promote the development of 

reinsurance in Brazil.” 

10 The figures on IRB–Brasil Re development were collected from the website , as of 

Jan.20, 2005. 

11 In millions of Reais. 


the crises in Asia and Argentina, and Russia’s 1998 moratorium being 

the most marked. These situations influenced the still unstable Brazilian 

economy which felt the effects and demanded fewer contracts from the 

IRB–Brasil Resseguros S.A. 

Activities in 1999, in line with what had happened in 1998, showed an 

increase in the number of premiums written. In 1998, as has been shown, 

R$ 1,032,900,000; in 1999, R$ 1,149,400,000. 12 

With respect to net income for 1999, the amount was R$ 155.4 million (it 

was R$ 170.4 million for 1998). The fact that this figure is low is explained 

by the exceptional payment of retroactive taxes (withholding), for the last 

five years, in the total amount of R$ 241 million. If it were not for this 

payment, the net income for the fiscal year would have been approximately 

R$ 400 million. 

In 2000, the number of written premiums again grew – R$ 1,189,345 

(billion), compared to R$ 1,149,532 (billion) 13 in 1999. 

At first glance, 2001 seems to have all the elements needed to show 

unfavorable results for IRB–Brasil Resseguros S.A. The serious crisis in 

Argentine, the grave terrorist attack on the World Trade Center in the 

U.S. on September 11, 2001, which exposed the vulnerability of the world’s 

greatest power, the loss of exports developed by the Brazilian economy, 

the increase in Brazil risk as measured by foreign agencies, all this meant 

that the economic picture was showing that there would be difficult 

moments for the country to face. 

The foundation of dedicated work laid by its employees was responsible 

for the good performance of the Brazilian insurance companies, insurance 

brokers and foreign brokers who enjoyed really positive final figures as 

presented by the Brazilian reinsurer agency. 14 

Because it was still under the influence of the effects of the terrorist attack 

of September 11, 2001, 2002 was marked by difficulties such as 

acceptance of risk, higher rates on the part of foreign reinsurers and 

more restrictive conditions (coverage). 

12 Nominal growth on the order of 11.2 percent. As to insurance lines, fire insurance was the leader, with R$ 213 million 

in total premium collected. It is important to note, however, that the most significant growth figures relate to automobiles 

(65 percent), homes (outside the Housing Finance System) – 47 percent –, oil hazards (148 percent), and rural hazards 

(117 percent). 

13 Fire insurance remained the leader in collection of premiums accounting for R$ 245 million – a 15 percent growth 

over 1999 figures. Highlights (in terms of growth) were the warranty lines – 73 percent, specifically due to business 

developed as a result of concessions of highway and telephony management to the private sector by the federal 

government, and rural hazards – 140 percent. 

14 The total amount of reinsurance premiums written was R$ 1.68 billion, that is a 41 percent growth over the previous 

figure. Fire insurance, as in the previous years, was the leader – R$ 295 million (37 percent of the total). It should be 

emphasized that the warranty line, with 61 percent growth, general civil liability with an increase of 142 percent, and 

engineering risks with 92 percent growth showed significant expansion as compared with figures for the previous year. 

It is important to note that the oil hazard line also had significant growth – 413 percent – above all due to the increase 

in reinsurer rates resulting from severe loss particularly after the explosion and sinking of the P-36 oil rig. Also, there 

has been a decline in the loss ratio – 69.1 percent in 2001 (88.2 percent in 2000), and the operating result showed a 

profit of R$153 million, against the R$16 million for the year before. 


Unfortunately, South America was not able to remain insulated from the 

difficult circumstances experienced by the U.S., especially in the political 

arena, given the mistrust of a considerable part of the U.S. population of 

the policies designed and implemented by the George W. Bush 

administration. 

The Argentine economic crisis got considerably worse and as a direct 

result, foreign investor confidence in the economy, and in Brazil’s economy 

by reflection, was seriously shaken. 15 

Even in the face of this unfavorable picture, IRB–Brasil Re managed to 

show good results. Total collections on reinsurance written premiums 

was on the order of R$ 2.45 billion (higher, therefore, than the R$ 1.67 

billion collected in 2001 – a growth of 46.5 percent). 16 

After the election of Luiz Inácio Lula da Silva as president of Brazil, 

uncertainty regarding the implementation of policies resulted in an 

immediate rise in exchange and inflation rates, i.e., the market was 

momentarily nervous. After 2003, when results showed a drop in the 

exchange rate against the dollar (the value of the Real rose), a reduction 

in the interest rates, as well as the passage of tax and social security 

reforms, the market perceived that the policies applied would not frighten 

off foreign investors, and this allowed for a gradual return of confidence 

in the national market on their part. 

Specifically, the total collection of premiums in the reinsurance market 

amounted to R$ 2.87 billion, that is, growth on the order of 17.22 percent 

compared to the prior year (R$ 2.45 billion). Again, fire insurance led the 

collection of premiums and was responsible for R$ 468 million. 

One of the last official reinsurance agencies still active in the world as 

noted 17 , its results for 2003 showed net income on the order of R$ 328 

million, thus maintaining the same levels earned in the year before. 

The data available for the first semester of 2004 show that the official 

Brazilian reinsurer agency realized one of the largest net profits in its 

history, reaching about R$ 280 million (profit was R$ 328 million for the 

entire year of 2003). 

As the result of a well developed and well applied policy for underwriting 

risk, the development of an excellent business portfolio, serious and 

professional administration, IRB – Brasil Resseguros S.A. has truly 

achieved outstanding results during this period. 

15 Dollar exchange rates hit historic highs, interest rates reached a suffocating 25 percent a year; expectations about 

the coming election of a leftist presidential candidate resulted in feeble economic growth. (GDP growth in the year was 

below 2 percent, as compared with the previous year). 

16 Fire insurance remained the market leader reaching R$ 384 million in collection of premiums; it was followed by 

general civil liability (R$ 115 million), warranty (R$ 65 million), and international transport (R$ 62 million). Despite these 

figures, and due to the strong currency depreciation, the net income in the fiscal year declined as compared with the 

previous year (In 2002, R$ 85.72 million in 2002 and R$ 152.54 million in 2001). 

17 See footnote no. 5. 


Based on the figures presented above, which demonstrate growth and 

also that insurance and reinsurance markets in Brazil have been 

undergoing a process of maturation, there is no way to deny the decisive 

role played by the Brazilian reinsurer. 

Independently of any criticisms of the monopolistic structure, of any 

inconvenience resulting from the non-existence of competition in the 

market, of the allegation that only good risks are accepted 18 , and that 

bad risks are not; and those insurers who for various reasons are not 

interested in the operation developed by the reinsurer, but whose own 

insured parties might be harmed (because they might have to pay higher 

premiums), the fact is that over the last ten years the Brazilian reinsurance 

market has developed significantly. 

New insurance lines have been elaborated; better conditions from the 

foreign reinsurers have been achieved, even considering the disturbances 

resulting from the enactment of Constitutional Amendment 13 in 1996; of 

Law 9.932 in 1999; the granting of the restraining order during the 

proceedings on constitutional lawsuit (ADIN) 2223-7 in 2000; the 

enactment of Constitutional Amendment 40 in 2003 and finally the revoking 

of the restraining order granted earlier, whose practical effect was to 

reinstate the effectiveness of some of the provisions of Law 9.932 19 , which 

had been withdrawn earlier, and which had the effect of loosening the 

monopoly still existing in the Brazilian reinsurance market. 

Even in the face of these important legal events, which will be the subject 

of further comment and which generated uncertainties, especially among 

foreign reinsurers, some of whom trusted in the loosening of the monopoly, 

and some of whom were completely incredulous, it can be stated with 

certainty, that after 65 years of activity by IRB–Brasil Resseguros S.A. in 

the Brazilian reinsurance market, a sustainable, and above all, healthful 

manner of operating has been developed and the laurels for this 

achievement go to IRB. 

3. Important Objectively, the loosening of the monopoly exercised by IRB – Brasil 

legal events Resseguros S.A. began with Constitutional Amendment 13 of 1996. Under 

the terms of this amendment, the language of subsection II of art. 192 of 

the Constitution of 1988 was altered 20 , and the term “the official 

reinsurance agency” was removed from the text. 

Due to this new language, from 1996 on, Fenaseg 21 admitted the possibility 

that foreign reinsurers could become active in the domestic market, and 

alleged that it was within the sphere of authority of the CNSP – the National 

18 The concept of good or bad risk is associated with the profitability it provides to the underwriting agency. Therefore, 

the loss ratio, the premium amount to be collected and the relevant taxes, among other elements, will be assessed by 

the reinsurer before execution of reinsurance contracts. 

19 The injunction granted by Minister Marco Aurélio Mello with respect to the constitutional lawsuit (ADIN) suspended 

enforcement of arts 1, 2, sole §, 3; 4 to 10, and 12 of Law 9.932/99. 

20 This subsection was changed to read as follows: “Art. 192. II – Permit for and operation of insurance, reinsurance, 

social security, and capitalization establishments, as well as the official oversight agency.” 

21 National Federation of Insurance, Private Pension, and Capitalization Companies. 


Council of Private Insurance – to grant permits and establish the operating 

regime for the reinsurers. 22 

Leaving aside discussions about whether or not the CNSP has jurisdiction, 

the fact is that beginning with this constitutional amendment, in practice 

the scenario did not undergo any noteworthy changes, and the IRB– 

Brasil Resseguros S.A. continued to exercise a monopoly. 

Then in 1999, Law 9.932 was enacted and transferred the areas of 

authority (main functions) exercised by IRB-Brasil Resseguros S.A. to 

the Susep – Superintendence of Private Insurance. Everything seems to 

indicate that, despite the language of art. 192 of the Constitution of 1988, 

the official reinsurance agency, which had been exercising its functions 

since 1939, was having some of them transferred by means of ordinary law. 

Once again, the reinsurance market expected that the time for the opening 

of the market had finally arrived, even due to the guidance handed down 

by Fenaseg authorizing foreign reinsurers to become active in the country, 

as long as they obtained the necessary permits from the National Council 

of Private Insurance – CNSP. 

On June 8, 2000, as noted earlier, the Workers’ Party filed constitutional 

lawsuit (ADIN) 2223-7 with the Supreme Court questioning the way the 

transfer of control (regulation) of the activities inherent to the reinsurance 

market from IRB–Brasil Resseguros S.A. to the Susep was being handled, 

since the statute in question was an ordinary law, while the constitutional 

text required complementary law. 

On July 13, 2000, following this line of reasoning, an injunction favorable 

to the petitioner was granted, suspending articles 1 and 2, the sole 

paragraph of art. 3, articles 4 to 10 and art. 12, all of them provisions of 

Law 9.932/99. Later, on October 10, 2002 the Supreme Court approved 

the injunction, showing that, at least in principle, the long awaited opening 

of the market would not occur. 

Then came Constitutional Amendment 40 of May 29, 2003, revoking, 

among other provisions, subsection II of art. 192 of the Constitution of 

1988, which regulates reinsurance operators in the country. 23 

Given the removal of the term “reinsurance” from the subsection in 

reference and the consequent creation of a new scenario, the Federal 

Prosecutor’s Office presented an opinion stating that constitutional lawsuit 

(ADIN) 2223-7 was groundless, since if the text of the Constitution no 

longer contained the term “reinsurance”, then the enactment of a 

complementary law for the purpose of transferring the attributions of IRB- 

Brasil Resseguros S.A. to Susep was unnecessary. 

22 With respect to this controversy on CNSP’s authority to grant permits and establish the operational regime for foreign 

reinsurers, there is an interesting article by Paulo Luiz de Toledo Piza: “Tendências em matéria de resseguro: caso e 

ocaso brasileiro” [Reinsurance Trends: the Case and the Decline of Brazil], published in the Annals of the 6th Ibero- 

Latin-American Insurance Law Conference, May 2000, Colombia. 

23 The original language of subsection II, art. 192, was: “Permit for and operation of insurance, reinsurance, social 

security, and capitalization establishments, as well as the official oversight agency;” 


In this new scenario, the decision of the rapporteur for the constitutional 

lawsuit, Minister Marco Aurélio Melo, 24 published in the Official Federal 

Gazette on September 15, 2004, ruled that the request it contained had 

lost its foundation” and this decision went through the legal process without 

the addition of any appeals. 

Under the new scene, which shaped up after the extinction of the 

constitutional lawsuit (ADIN), the provisions of Law 9.932/99, whose 

effects had been suspended, were reinstated. This meant that, at least in 

theory, a green light was given to transferring the regulatory functions of 

IRB–Brasil Resseguros S.A. to the Susep. 

One asks, then: would it be necessary to use complementary law to deal 

with the transfer of powers, given the reception of Decree 73/66 as 

complementary law? The replies, in effect, lean toward both sides. 

However, even as a way of avoiding new difficulties resulting from 

inadequate legislative reforms, the need to promote these transfers 

through complementary law is sustained, even given the suppression of 

subsection II, art. 192, of the Constitution of 1988. 25 

4. The coming years – The federal government 26 , foreign reinsurers 27 and IRB–Brasil Re 28 view 

a new regulatory the present as a fertile time for the rise of a new regulatory framework for 

framework for the the reinsurance market. We hope that 2007 will in fact be the year that 

reinsurance market - inaugurates a new era for the Brazilian reinsurance market. 

proposals 

24 Sections of the decision: “(...) both the Attorney General’s Office and the Federal Prosecutor’s Office presented the 

opinion that the Constitutional Lawsuit was groundless. This premise proved to be unique: the amendment of art. 192 

of the Federal Constitution by means of Constitutional Amendment 40 of 2003. When called to make a pronouncement, 

the petitioner remained silent. The expressed groundlessness of the lawsuit therefore proceeds. Constitutional 

Amendment 40 of 2003 amended art. 192 of the Constitution, and revoked its subsections, items and paragraphs, 

which the lawsuit argued had not been observed. It is worth noting that there is no longer any reference to reinsurance 

in the text of the Constitution. Given this situation, I render the request contained in the initial petition groundless.” 

25 Paulo Luiz de Toledo Piza’s views on the subject in “O resseguro e o STF” [Reinsurance and the Supreme Court], 

pg. 16, available on the website as of Dec. 20, 2004, reads as follows: “Therefore, considering 

that Decree 73 has been included in the Federal Constitution as a complementary law; and as it remains vested of 

such quality, and considering that an ordinary law cannot harm a complementary law, it seems reasonable to determine 

that Decree 73 prevails over Law 9.932, even under the light of the current art. 192 of the Federal Constitution”. 

26 The reader should refer to the study “Reformas microeconômicas e crescimento de longo prazo” [Microeconomic Reform 

and Long-Term Growth] by the Secretariat of Economic Policy of the Ministry of Finance, published in December 2004. 

27 On its website accessed on Jan 20, 2005, Lloyd’s, a reference in the 

world reinsurer market, published the following comments about the Brazilian reinsurer market: “Brazil – Liberalization 

of Reinsurance: The liberalization of the Brazilian reinsurance market and the privatization of the reinsurance monopoly, 

IRB Brasil Re, are still to take place. The IRB is still the reinsurance regulator in Brazil, which in turn has prevented it 

from being privatized. The ADIN (Constitutional lawsuit) that had been filed by the Workers Party (PT), against Law 9932 

of 20 December, 1999 (which relates to the transfer of regulatory from IRB to Susep), had blocked development in Brazil 

for over two years. The ‘ADIN’ was finally judged on October 10, 2002 by the Supreme Court. The result was that the 

privatization of the IRB could only take place once the monopoly had transferred its (reinsurance) regulatory powers to 

SUSEP, the insurance regulator. This could only be done either through Complementary Law or through a repeal of Law 

9932/99 by the CNSP (National Private Insurance Board).” Hence liberalization of the reinsurance market / privatization 

of the IRB will not progress before appropriate action be taken with regard to the regulation of reinsurance in Brazil.” 

28 The then IRB president Dr. Lídio Duarte said in an interview given to the Valor Econômico newspaper on Jan. 7, 

2005: “IRB Brasil Re, the Government-run reinsurer monopoly in the country is preparing for the inevitable: the end of 

the monopoly and the opening of the reinsurance market to foreign competition. As Valor anticipated in its December 

29 issue, the government will send Congress this year a Bill to end the official reinsurance monopoly, and is currently 

analyzing the IRB privatization.” 


In the legislative field, ever since the enactment of Constitutional 

Amendment 13 in 1996, the country has been awaiting this new 

framework, which on the one hand, will make the sustainable development 

of the national reinsurance market possible, that is, with no abrupt foreign 

exchange evasion to the international market; and, on the other hand, 

the beginning of activities undertaken directly by the foreign reinsurers, 

that is, with no intermediation on the part of the Brazilian reinsurance 

agency. 

Raul Teixeira, while still Chief Attorney at Susep, published an article 

entitled “Seguro, Previdência e Capitalização” [Insurance, Social Security 

and Capitalization] 29 , which included two valid proposals for the opening 

of the reinsurance market and to end the monopoly exercised by IRB. In 

sum, the first proposes withdrawing the issue of opening the reinsurance 

market from the province of the judiciary, whether by revoking Law 9932/ 

99, or by passing another law for this purpose. The natural consequence 

of returning to the earlier status prior to the enactment of Law 9.932/99, 

would be the voiding of constitutional lawsuit (ADIN) 2233-7, which 

happened later anyway due to the effect of Constitutional Amendment 40 

of 2003. Along these lines, the first proposal presented by Dr. Raul Teixeira 

consists of delegating reinsurance regulatory functions to Susep right 

away, based on Constitutional Amendment 13 of 1996. With respect to 

the reinsurance market, it reaffirms that these powers can be exercised 

by the CNSP, based in the provisions of arts. 5, subsection III, 32, 

subsections. I, II, VII and X, all from Decree 73/66. 30 

The second proposal, in sum, is that beginning with the dismissal of 

constitutional lawsuit (ADIN) 2223-7, as a result of the coming into force 

of Constitutional Amendment 40 of 2003, Law 9.932 of 1999 would be 

sufficient to deal with transferring the regulatory functions exercised by 

IRB–Brasil Resseguros S.A. to the Susep, which naturally would make it 

possible to end the monopoly and to open up the reinsurance market. 31 

Independently of the legislative technique that will be applied, it is believed 

that the most important thing about ending the monopoly and the 

subsequent market opening is that protective measures for the interests 

of the national reinsurance market be taken, i.e., that its disappearance 

not be permitted along with the consequent loss of foreign exchange for 

the country. 

The reinsurance market in Argentina, for example, underwent three distinct 

phases 32 , and it is true that the present model, which is the result of the 

maturation of its operations is applied in a free manner, independent of 

regulation (the market is self-regulating). 

29 TEIXEIRA, Raul. Seguro, previdência e capitalização. Rio de Janeiro, Forense, 2002, pgs. 79/92 and 93/100. 

30 CNSP’s jurisdiction to lead the opening of the reinsurer market has been a subject for doctrinal debate, as shown 

above in footnote no. 17. 

31 Also, as shown in footnote no. 22, the relevant Doctrine holds that, even if Law 9.932/99 would become effective 

again, the acceptance of Decree 73/66 as a complementary law would still impede the transfer of regulatory power by 

means of an ordinary law. 


The ending of the monopoly in the reinsurance market is in harmony with 

the principle of free competition, recognized by art. 170, IV of the Federal 

Constitution of 1988. In effect, this should be seen as a point of support 

for the liberal economic regime. 33 

In this process, which is based on constitutional provisions, the state 

stops being the agent that promotes the various sectors of the economy 

– a function which has been taken on by private enterprise – in order to 

become responsible just for policing abuses, guaranteeing the collective 

welfare and the country’s development. 34 

Therefore, it is up to government to guarantee only that competition is in 

fact free and not just mandated by law 35 , and this function belongs to an 

agency created by the legislature – or chosen from among those already 

existing (the CNSP, for example) – to be vigilant about maintaining a 

healthy reinsurance market, which will directly serve the interests of the 

insurers and these, in turn, will underwrite the risks that affect the interests 

of the insurance companies themselves. 36 

32 DIRUBE, Ariel Fernandez. Evolución del marco legal del reaseguro em la Argentina. In: BARBATO, Nicolas H. 

(coord.). Derecho de Seguros. Buenos Aires: Hammurabi, 2001, pp. 480/481: “De todo lo expuesto surge que el 

mercado assegurador argentino reconoce tres etapas em su desenvolvimiento operativo em matéria de reaseguros: 

a) una primera etapa prácticamente libre en la cual no existieron normas que fijaran requisitos mínimos respecto de 

las empresas de reaseguros de exterior, síno sólo algunos principios básicos que debían observar las asseguradoras 

locales al formalizar sus contratos de reaseguro. b)una segunda etapa, fuertemente proteccnionista, en la que se 

establecieron pautas de diferenciación de la nacionalidad de las entidades asseguradoras directas, un consecuente 

tratamiento diferencial en varios aspectos y especialmente en materia de reaseguros y además la creación de una 

empresa reaseguradora monopólica, primero de carácter mixto y luebo totalmente estatal. c) Finalmente, uma tercera 

etapa, de mercado libre desregulado – que estamos viviendo a partir de la liquidación del reasegurador estatal -, con 

libre contratación dentro de ciertos niveles y requisitos, no sólo referidos al contenido de los contratos si no también a 

las condiciones que deben necesariamente reunir las reaseguradoras, para se aceptables por la autoridad de control 

los contratos concertados con ellas. Este esquema constituye un novedoso avance legislativo en nuestro país, que 

implica la introducción de la normativa en un campo asta ahora poco frecuentado por el derecho positivo.” In a free 

translation by the author: “From all that has been posited, it is understood that the insurance market in Argentina 

recognizes three stages in its operational development with respect to reinsurance: a) a first stage which was practically 

free, when there were no rules that set minimum requirements for foreign reinsurance companies, but just some basic 

principles that local insurance companies had to observe in formalizing their reinsurance contracts. b) a second stage, 

which was strongly protectionist, in which differentiated treatment was accorded depending on the nationality of the 

direct insurers in several respects, especially regarding reinsurance, in addition to the creation of a monopolistic 

reinsurance company, at first as a mixed enterprise and later, an entirely state-owned company, and c) finally, a third 

stage of free market and deregulation – which we have been experiencing since the state reinsurer was liquidated - 

with free contracting within certain levels and requirements, which refer not just to the content of the contracts, but 

also to the conditions that reinsurers must necessarily meet for the contracts signed with them to be acceptable to the 

regulatory authorities. This scheme represents a new legislative advance in our country, which has resulted in the 

introduction of rules into a field which has been little visited by positive law.” 

33 BASTOS, Celso Ribeiro, in Curso de direito econômico. São Paulo: Celso Bastos Editora, 2004: “Free competition 

is a pillar of the liberal system because it ensures quality products at fair prices to consumers. Moreover, for those 

who embrace an economic activity it’s a way to be rewarded for better capacity, dedication, commitment, and become 

more prosperous than competitors.” 

34 SOUTO, Marcos Juruena Villela. Direito administrativo da economia. 3rd ed. Rio de Janeiro: Lumen Juris, 2003, 

pg. 139. 

35 Impelling government to combat market distortions , art. 173, § 4 provides that “the law shall repress the abuse of 

economic power that targets market domination, elimination of competition, and arbitrary increase in profits.” 

36 About the worries of the insured: “Believe me, sir: Had I such venture forth, the better part of my affections would be 

with my hopes abroad. I should be still, plucking the grass to know where sits the wind, peering in maps for ports, and 

piers, and roads; and every object that might make me fear misfortune to my ventures, out of doubt would make me 

sad.” (SHAKESPEARE, William. The merchant of Venice). 


5. Conclusion The figures appearing throughout this article reveal, beyond any doubt, 

how significantly the Brazilian reinsurance market has grown over the 

last ten years. 

6. References 

The prospects for coming years, according to the most reliable sources 

(the federal government, the IRB and the market overall), point to the 

opening of the national reinsurance market, an opportunity for the role 

played by IRB – Brasil Resseguros S.A. to become differentiated, and up 

to the present, there has been no conclusion regarding the way to 

accomplish this, whether to privatize it absolutely, or whether it will continue 

to have government capital in its composition. 

In light of these changes, it is worth cautiously and fully considering the 

safeguards that should be applied by the new regulations in the interest 

of being careful that the IRB–Brasil Resseguros S.A. is not completely 

handicapped vis-à-vis its foreign competitors. Along the same lines, the 

position adopted by the national president of Fenacor – the National 

Federation of Insurance Brokers, Armando Vergílio dos Santos Júnior 37 , 

maintains that the opening should be gradual and parsimonious, coherent 

with the best technical legislation, and that the important role that the IRB 

has carried out over the 65 years of existence should serve as a guideline. 

To paraphrase the distinguished English writer, Oscar Wilde, “our 

proverbs need rewriting. They were made in winter, and it is summer 

now”. To explain, our reinsurance market was conceived in a “season” 

which has passed (remote times), in which an interventionist state 

displayed its “claws.” Today we live in other times, in another “season”, 

with characteristics completely different from earlier times, with an 

extremely competitive globalized market, and to conclude, a new model, 

a new regulatory framework should be thought about and applied 

gradually, being careful about the continuity of the development of the 

national reinsurance market. 

AIDA. Abertura e desregulamentação, n. 554, de 19.01.2005. 

AIDA. Fenacor defende abertura com salvaguardas internas, n. 555, de 21.01.2005. 

37 The International Insurance Law Association – AIDA newsletter No. 555, of Jan. 21, 2005 features the following 

article: “FENACOR upholds market opening with domestic safeguards: The president of the National Federation of 

Insurance Brokers (FENACOR) Armando Vergilio dos Santos Jr. believes that insurance market opening must be 

accompanied with measures to safeguard domestic market interests. According to him, in a free market economy, 

any type of monopoly can become a roadblock to the development of a given sector. But opening the reinsurance 

market without transition safeguards for IRB (Brasil Re) is a very risky undertaking. In two or three years IRB could 

lose all good deals to foreign competitors, and get only the poor ones. Brazil would be totally at the mercy of international 

market variations – Armando Vergílio argued. He also said that the big insurance companies in one way or another 

have connections with international reinsurers, to which they will preferably entrust their extra risks. (...).We have to 

study all variants. I believe FUNENSEG (National School of Insurance), together with other market actors, could 

coordinate this type of work,” Armando Vergilio suggests. The reinsurance model advocated by Armando Vergilio 

provides, among other points, for a gradual market opening to enable the creation of a local reinsurance market, thus 

avoiding total dependency on the international market.” 


ALFANO, Orlando Hugo. El Control de Seguros Y Reaseguros: Natureza Y Alcance. Buenos Aires: 

La Ley. 2000. p. 239. 

BASTOS, Celso Ribeiro. Curso de Direito Econômico. São Paulo: Celso Bastos Editora, 2004. 

DIRUBE, Ariel Fernandez. Evolución del marco legal Del reaseguro em la Argentina. In: BARBATO, 

Nicolas H. (coord.). Derecho de Seguros. Buenos Aires: Hammurabi, 2001, p. 480-481. 

IRB-BRASIL Re se reorganiza à espera da abertura. Jornal Valor Econômico, 7.01.2005. 

O OTIMISTA (pseudônimo). Resseguro no Brasil: retrospectiva e perspectiva. Rio de Janeiro, 1989, mimeo. 

MINISTÉRIO FAZENDA. Secretaria de Política Econômica. Reformas microeconômicas e crescimento 

de longo prazo. Estado de São Paulo, em 29.12.2004. 

PIZA, Paulo Luiz de Toledo. O resseguro e o STF. Available in: www.ibds.com.br. 

PIZA, Paulo Luiz de Toledo. Tendências em matéria de resseguro: caso e ocaso brasileiro. In: CONGRESSO 

IBERO-LATINOAMERICANO DE DIREITO DO SEGURO, 6, Colômbia. Anais... Maio 2000. 

SHAKESPEARE, Willian. O Mercador de Veneza. 

SOUTO, Marcos Juruena Villela. Direito administrativo da economia. 3. ed. Rio de janeiro: Lumen 

Juris, 2003. 

STIGLITZ, Rubén S. Derecho de Seguros. 4. ed. Buenos Aires: La Ley, 2004, p. 300. T. III. 

TEIXEIRA, Raul. Seguro, previdência e capitalização. Rio de Janeiro: Forense, 2002, p. 79-92 e 93-100. 

TEPEDINO, Gustavo. Premissas metodológicas à constitucionalização do direito civil. In: Temas de 

Direito Civil. Rio de Janeiro: Renovar, 1999. p. 22. 

Sites 

www.irb-brasilre.com.br – IRB – Brasil Resseguros S.A. 

www.lloyds.com – Lloyd´s of London 

www.senado.gov.br – Senado da República Federativa do Brasil 

www.planalto.gov.br – Presidência da República Federativa do Brasil 

www.fenaseg.org,br – Federação Nacional das Empresas de Seguros, Previdência Privada e 

Capitalização 

www.funenseg.org.br – Escola Nacional de Seguros - Funenseg 

www.ibds.com.br – Instituto Brasileiro de Direito de Seguros

RBRSi 1- 9 Ilan Goldberg.PMD - Escola Nacional de Seguros

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