In September 2005, the Brazilian insurance authorities (SUSEP) introduced changes to group life insurance conditions, mainly concerning coverage of total and permanent disability due to illness.
The changes are in response to the fact that SUSEP has been receiving too many complaints from policyholders following refusal of their claims. It is not uncommon for 50% of policyholder litigation claims to be based on rejected disability claims. Two main factors are involved:
- the generosity of the Brazilian social security institution (INSS) in declaring people totally disabled due to illness
- lack of clarity about this coverage under the law
Additional disability coverages
Under the law, insurance companies may now offer additional disability coverages as follows:
- Long-term care insurance
- Critical illness coverage
- Disability coverage based on functional assessment tests
Note, however, that due to lack of experience, insurers in Brazil will rarely offer disability coverage based on functional assessment tests.
New rules on changes to plan conditions and rates
The change in the law also means that for plans where employees pay either part or all of the premiums, any changes to rates or conditions that affect employees must be accepted by at least 75% of insureds.
New and renewed contracts affected from July 1, 2006
The changes must be introduced for new contracts as of July 1, 2006, and for contracts renewed from July 1, 2006 to June 30, 2007. The new conditions apply for new members as of January 1, 2007.
For more information, please visit www.icatu-hartford.com.br
- the generosity of the Brazilian social security institution (INSS) in declaring people totally disabled due to illness
- lack of clarity about this coverage under the law
Additional disability coverages
Under the law, insurance companies may now offer additional disability coverages as follows:
- Long-term care insurance
- Critical illness coverage
- Disability coverage based on functional assessment tests
Note, however, that due to lack of experience, insurers in Brazil will rarely offer disability coverage based on functional assessment tests.
New rules on changes to plan conditions and rates
The change in the law also means that for plans where employees pay either part or all of the premiums, any changes to rates or conditions that affect employees must be accepted by at least 75% of insureds.
New and renewed contracts affected from July 1, 2006
The changes must be introduced for new contracts as of July 1, 2006, and for contracts renewed from July 1, 2006 to June 30, 2007. The new conditions apply for new members as of January 1, 2007.
For more information, please visit www.icatu-hartford.com.br