Insurance cooperatives and mutual societies in Brazil: Major changes with new law

2025 is poised to be a busy year for the Brazilian re/insurance market with the approval of the new Insurance Law and sanction of Complementary Law No. 213/2025, which legalizes the operations of mutual societies and regulates the operations of insurance cooperatives, partners and of counsel at Brazilian law firm Campos Mello Advogados, told Reinsurance News.

Campos Mello Advogados is an independent law firm operating throughout Brazil, working in cooperation with international law firm DLA Piper.

In recent times, the legislative spotlight has turned its focus to Brazil’s insurance sector, and with major changes imminent as new laws come into effect, we spoke with partners Marcella Hill, Jaqueline Suryan, and Of Counsel, Mariana Jardim, about the changes and implications for insurers and reinsurers.

For background, on December 9th, 2024, Brazil’s landmark Insurance Law was enacted and comes into effect from the end of 2025. Additionally, on January 15th, 2025, President Lula sanctioned the latest Complementary Law, which permits mutual protection societies’ operations.

“The new Complementary Law is already in force for most of its provisions, except for those related to the sanctioning regime, effective 1 year as from the enactment of the Complementary Law, and for an alternative to the registry before SUSEP, not effective for the next 4 years,” said Hill, Partner and Head of Insurance and Reinsurance.

Interestingly, Hill explained that the operation of mutual societies is quite controversial, as their legality has been questioned since day one.

“Although since 1916 the mutual societies have been legally authorized to do business in Brazil, as from 1966, private insurance operations in the country became restricted to corporations (sociedade por ações) and insurance cooperatives (exclusively in agricultural, health, and labour occupational accident insurance). Thus, the operations of mutual societies (stricto sensu) in the country became no longer regulated.

“Despite the initial retraction of their activities, mutual societies did not cease to exist. They justified their operations on the exercise of the constitutional right of freedom of association, on the legality of entering into contracts not described in the Brazilian Civil Code (contratos atípicos) as well as in the principles brought by the Law of Economic Freedom (Law No. 13,874/2019),” said Hill.

“The operations of these entities caught the attention of the Brazilian Superintendence of Private Insurance (SUSEP), which started to fight mutual societies’ operations with the support of the Federal Attorney General’s Office. Courts were also drawn to the discussion – the Federal Supreme Court has declared unconstitutional various state laws that allowed these entities to operate in Brazil.

“Complementary Law No. 213/2025 brings this discussion to an end by expressly permitting mutual protection societies’ operations. Additionally, it broadens the scope of action of insurance cooperatives that are now allowed to cover all lines of business, except for those specifically excluded by regulation (still to come),” she added.

The new Complementary Law amends Decree-Law No. 73/1966, which Suryan, Insurance and Reinsurance Partner, explained provides for the Brazilian insurance industry to also encompass the activities of mutual societies (in the broader sense).

“The main concerns of the Complementary Law relate to the (i) solvency of these entities, (ii) consumer’s protection, (iii) regulation and supervision of the market, (iv) integration of the entities authorised to operate in the mutual protection system into the National Private Insurance System, (v) recognition of the agreement entered with the consumer as an extrajudicial enforcement instrument allowing those societies to share (and receive) all expenses from consumers, (vi) subjection of mutual societies’ operations to the regulations of the National Private Insurance Council (CNSP) and to SUSEP’s supervision, and (vii) application of proportionality in the supervision of the insurance industry as a whole, considering the size, nature, risk profile, and systemic relevance of each entity,” Suryan told Reinsurance News.

One thing the new law has led to is the creation of the administrator for mutual asset protection operations, which must be established as a corporation.

As outlined by Jardim, Of Counsel of Insurance and Reinsurance at Campos Mello Advogados, this entity’s “exclusive purpose is to manage mutual asset protection operations, which needs to be authorized by SUSEP to do business in Brazil and comply with other requirements, such as obtain SUSEP’s approval to appoint officers.”

She further explained: “In order to mitigate harmful effects of the activities currently conducted by unregulated mutual societies, the complementary law proposes: (i) granting 180 days deadline, counted from its publication in the Official Gazette, to request its registry before SUSEP or to cease its operations; (ii) granting benefits for the ongoing sanctioning administrative proceedings that vary from suspension to dismissal of penalties; (iii) suspension of the requirement to pay fines or forgiveness of unpaid fines imposed by SUSEP; (iv) suspension or even dismissal of civil actions filed by the Federal Attorney General’s Office on behalf of SUSEP; and (v) the cancellation of criminal liability applied to directors and officers of these entities in connection with the operation of unauthorised financial institutions; all of these benefits being subject to the regularisation of these operations of the mutuals under the terms of the new Complementary Law.”

The Partners and Of Counsel stressed that the legalization of mutual assets protection operations not only assigns additional responsibilities and duties to SUSEP but also allows the regulator to charge a supervision fee for these entities.

But what does all of this mean for insurers, reinsurers, and broking groups? According to the Partners and Of Counsel, it creates opportunities in Brazil for new players to foster innovation and growth within the country’s re/insurance industry.

“Insurance brokers will be authorised to intermediate the purchase and promotion of contracts for participation in mutual assets protection societies. However, they are forbidden – and the partners and managers of insurance brokerage companies – to have employment relationships or serve as managers of insurance cooperatives, mutual protection administrators, or any associations to which these groups are linked, similar to the current restrictions in place with respect to insurance companies,” said Hill.

“For the reinsurance market, including reinsurance brokers, a new business partner emerges, as the Complementary Law permits that part of the risks of entities authorised to operate as administrators for mutual protection operations and insurance cooperatives are undertaken by reinsurers,” added Suryan.

“In the next few days, the CNSP and SUSEP will mostly likely regulate these players’ operations, while still preparing for the new Insurance Law entering into force at the end of this year. It seems that 2025 will be a busy year for the Brazilian insurance market,” concluded Jardim.

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