DS (Brazilian Institute of Insurance Law), states that the anticipation only applies to losses already covered and that have already been determined
Lawyers consulted by InfoMoney list impacts for insurers and consumers
by Denise Bueno
Journalist Gilmara Santos, from Infomoney, says that the Complementary Law Project (PLC 29), which is currently being discussed in the National Congress, regulates the private insurance market in the country by unifying rules that involve consumers, brokers, insurers and regulatory bodies, is far from being unanimity. In the sector, there is concern that the new norm, if approved, will bring financial instability to insurers and increase values in insurance policies.
The project provides for the advance of partial amounts to the insured before payment of the indemnity. According to the text, “the adjustment and settlement of the claim [occurrence of the risk covered during the period of validity of the insurance plan] must be carried out, whenever possible, simultaneously. Once the existence of a claim and partial amounts due to the insured or beneficiary have been determined, the insurer must adjust its provisions and make, within a maximum of thirty days, advances on account of the final payment to the insured or beneficiary”.
For industry representatives consulted by InfoMoney, it is not technically appropriate to oblige the insurer to pay in advance. They claim that the amounts are paid after the adjustment and settlement of the claim, to avoid undue payment.
“This measure may bring additional challenges to insurers. Anticipating the payment of claims before completing the desk review can increase the risk of fraud and overpayments. In addition, insurers may face difficulties in adequately pricing insurance, since they would not have all the information necessary to correctly assess the risks involved. This could result in a possible increase in insurance costs”, emphasizes lawyer Léo Rosenbaum, from Rosenbaum Advogados.
Lawyer Bianca Lobo, from the Nelson Wilians Advogados law firm, considers that “the payment of indemnities prematurely without having carried out the calculation of the claims, in addition to causing concern on the part of the insurers, may lead to the payment of undue indemnities in addition to cause damage to an insured community, in view of possible application of fines for non-compliance with the payment of the claim within the period stipulated by PLC 29/2017”.
“The regulations and the stipulated period cannot be applied in general to all claims caused, since often, due to the complexity of the cause, insurers are unable to determine, within the established period of 30 days, claims of large proportions in the same way that investigate minor claims, a point that must be considered”, says Bianca Lobo.
Nara Rodrigues, a lawyer at GVM Advogados, sees other risks if the advance of the indemnity amount is approved.
“This measure could have a negative impact on the sector, with the risk of evasion by insurers and reinsurers from the Brazilian market, as well as an increase in the prices of insurance policies. In order to adapt the claim calculation process to the expected payment period of up to 30 days, insurers will have to make greater investments in structure and personnel and will inevitably seek to pass on to the insurance contracting party the amounts invested by it to meet the legal provision”, says the lawyer.
Experts also assess that the measure, if approved, could encourage a significant increase in lawsuits.
“If it turns out, after advancing the amounts to the insured or beneficiary, that the claim was not due, the company will have to sue the Judiciary to be reimbursed for the amounts advanced, if the refund does not occur amicably”, evaluates Nara Rodrigues.
Rosenbaum also considers that, if approved, it is likely that the anticipation of indemnities will be evaluated in light of contractual principles and specific insurance legislation. “Depending on the established criteria and procedures, discussions may arise about the appropriateness and legality of this measure,” he says.
“In cases where indemnities are paid improperly, the insurer may charge the damage through a lawsuit, requesting reimbursement of the amount unduly paid”, emphasizes Bianca Lobo.
Regarding the insured, the anticipation of the payment of indemnities can be positive, above all, in situations where they are under emergency situations or in need of immediate financial resources, says Rosenbaum.
“They would receive compensation more quickly, which could help deal with expenses arising from the claim. However, this anticipation can also bring challenges. Reducing the assessment time can limit the accuracy of claims analysis, leading to inadequate payments or even undue denials of coverage.”
The lawyer Ernesto Tzirulnik, president of the IBDS (Brazilian Institute of Insurance Law), states that the anticipation only applies to losses already covered and that have already been determined. “In these cases, payment has to be made immediately and not at the end of the process. In other cases, when they are still being investigated, nothing changes”, he points out.
Loss x regulation
“Specifically in relation to the chapter on regulation and settlement of claims of PLC 29/2017, I believe that there is an incompleteness in the concepts ‘claims’ and ‘regulation of claims’ throughout the proposed text, which ends up reflecting negatively on the provisions and in the interpretations that may arise on the aspects of payment of indemnity”, analyzes the lawyer Luciana Prado, partner of insurance, reinsurance and private pension at Lefosse Advogados.
The specialist adds that the “concept of claim, which the PL does not bring, should include the understanding that, in order to be able to call a fact a ‘ claim ’, such fact should be covered by the policy”, she says.
It so happens that, she continues, to classify a claim, there is a necessary and prior analysis of the fact versus the contractual conditions of the insurance contract, which the market today commonly calls as regulation or claim settlement.
“Thus, the term ‘loss adjustment’ cannot be understood simply as the procedure ‘which aims to identify the causes and effects of the fact notified by the interested party’, as intended by article 77 of the PLC. The main aspect of the regulation is to assess whether the fact that occurred and notified effectively fits as an event covered by the contracted policy, considering the scope of the contracted coverages and the exclusions described therein and agreed upon when it was issued”, explains the lawyer.
“Thus, I understand that the content of paragraph 1 of article 79 of the PL must be interpreted in accordance with the concepts of claim and claim adjustment. Thus, when it is said that ‘if a claim has been determined, amounts may be advanced as indemnity’, the expression ‘a claim has been determined’ should be read as ‘the existence of an event covered by the policy has been confirmed’” . For her, only this interpretation would validate and justify the advance of any indemnity amounts to the insured.
The InfoMoney report sought out the CNseg (National Confederation of Insurance Companies) to comment on the experts’ analyzes on PLC 29, but the entity did not manifest itself until this publication.