AM Best is of the view that Brazil’s sweeping reforms in its insurance regulatory framework represents an institutional shift for the country’s insurance market, moving toward greater professionalism, consumer protection and international alignment.

The Best’s Commentary, “Balancing Reform and Restraint: Brazil’s Insurance Overhaul Amid Economic Headwinds,” notes that the country’s regulatory overhaul comes at a time of economic deceleration. According to the International Monetary Fund, the country’s real GDP growth is projected to slow to 2.0% in 2025 from 3.4% in 2024. Inflation is forecast to increase to 5.3% in 2025 from 4.4% in 2024 to 5.3% in 2025. “High interest rates, fiscal rigor, and global trade headwinds are constraining growth and limiting the government’s policy flexibility,” said Ann Modica, director, Credit Rating Criteria, Research and Analytics, AM Best.

A major step in Brazil’s regulatory overhaul is the enactment of the Insurance Contract Law (Law No. 15.040/2024), which replaces outdated legal provisions and introduces a modernized structure for insurance contracts. Effective from December 2025, the law imposes stricter response deadlines for insurers and reinsurers, enhances claims transparency and restricts unilateral policy cancellations. It also limits parties’ ability to designate foreign law and jurisdictions in insurance and reinsurance disputes, potentially impacting international contract structuring.

Other enacted reforms seek to address regulation of mutual societies and cooperatives and strengthen risk governance through Own Risk and Solvency Assessment (ORSA) requirements, as well as more robust operational rules for brokers and loss adjusters. Consequently, market participants must act promptly to adapt their legal, operational and governance structures.

“Taken together, these legal and institutional shifts represent a turning point for Brazil’s insurance market as they aim to broaden market access and deepen financial inclusion while introducing solvency and governance standards proportionate to the size and nature of these organizations,” said David Lopes, senior industry analyst, Industry Research and Analytics, AM Best.

To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=358761.

AM Best will host its first-ever market briefing in São Paulo to discuss Brazil’s (re)insurance segment, as well as present on the credit rating agency’s recently launched National Scale Rating for Brazil. The event is scheduled for Thursday, Oct. 23, 2025, from 3:00–6:00p.m. (BRT) at the Renaissance São Paulo in Brazil. For more information, click here.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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