Brazil embraces ILS from January 4

Brazil’s regulator the Superintendência de Seguros Privados (Susep) has published new rules that will enable the issuance of insurance-linked securities (ILS) and the formation of special purpose reinsurance vehicles in the market from January 4.

The move will be of great interest to Bermuda’s ILS community, which remains the global leader in the sector. It could mean opportunities to work with insurers and reinsurers in Brazil on leveraging this new form of risk transfer.

The new rules are the culmination of a consultative process on the legislative framework that had been going on for several months. The government’s Ministry of Economy has now laid down rules around how Susep will regulate the use of these entities.

The move is an important one for the market as it offers a new source of international capacity to insurers and reinsurers operating in the market, potentially lowering their cost of capital. It also brings the market in line with the many others globally that allow this form of risk transfer.