Understand how judicial activism affects the insurance market

Judicial activism in the insurance sector harms both companies and consumers, increasing costs and generating legal uncertainty. According to Ana Thereza Basílio of law firm Basílio e Notini, this is a detrimental movement that brings unpredictability to contractual parties, who are held hostage to judges’ personal ideas, and jeopardizes the very structure of the democratic rule of law.

“Not all judges have in-depth knowledge of issues related to the sector and that is why we have a regulatory agency that sets the rules for the functioning of this market,” explains the lawyer, referring to the Brazilian Private Insurance Regulatory Agency (SUSEP). According to her, insurers often experience impasses when they find themselves having to comply with court rulings that differ from SUSEP’s technical standards.

Paula Menna Barreto, also of Basílio e Notini, agrees that the judiciary ought to defer to the criteria established by the regulatory agency, which consider factors such as the financial risks involved, technological innovations, the role of insurers and the characteristics of policyholders. “If a judge orders an insurer to comply with a decision contrary to the technical rules followed by its competitors, an actuarial imbalance is created and what we see is a large number of small and medium-sized insurers that are financially unsustainable,” she says.

These two Basílio e Notini partners were recently guests on SeguroCast, CNseg’s podcast, which focused on the implications of judicial activism in the insurance sector.

FIDES Rio 2023

Law firm Basílio e Notini is one of the silver sponsors of the 38th Western Hemisphere Insurance Conference (FIDES Rio 2023), which will take place from September 24 to 26. This international event will have a space dedicated to debating legal issues, called “Legal Dialogue in the Insurance Market.”

The objective is to discuss the sector’s priorities and challenges in the judicial sphere, thinking above all about how to improve the competitiveness and business environment of insurance companies operating in Brazil. The idea is to offer an up-to-date view of the Brazilian judiciary’s contributions to the sustainable growth of the insurance industry.