The year 2025 begins with some important changes for the insurance and reinsurance industry and especially for the legal and human resources departments of institutions in this sector: at the end of December 2024, the National Council of Private Insurance (CNSP) published CNSP Resolution 476/24, which will have a significant impact on remuneration policies and practices in insurers, reinsurers, capitalization companies, and pension funds.
Just as happened in 2010, when the National Monetary Council (CMN) published CMN Resolution 3,921, which forced financial institutions to implement in-depth adjustments to their remuneration policies, CNSP Resolution 476/24 will require joint efforts from the legal and human resources departments, so that companies subject to the new rules can adapt.
The impact of CNSP Resolution 476/24 on the insurance, reinsurance, capitalization, and pension industry, however, is even greater than that generated by CMN Resolution 3,921, given its scope and the subject matter regulated.
Below, we summarize the main points of the new standard, which will come into force on January 2, 2026:
- The rules set out in CNSP Resolution 476/24 do not only cover remuneration policies and practices relating to statutory officers. They also affect non-statutory senior management positions, key managers in control functions, and managers whose actions have a material impact on the company's exposure to risks,
- In addition to dealing with variable remuneration, the new resolution contains rules on the relationship between fixed and variable remuneration and short- and long-term incentives, deferral rules, malus and clawback rules and stock-based payment,
- The payment of minimum bonus amounts and other incentives will be limited, and
- The new resolution establishes detailed governance rules to be followed by supervised institutions in relation to remuneration policy, which include the obligation to set up a remuneration committee.
Setting up a remuneration committee and establishing a remuneration policy are fundamental steps in the process of adapting institutions to the new standard. This process will require implementing governance rules and reviewing the remuneration policies currently in place.
To help you understand the new rules, we have prepared a list of questions and answers on the main aspects of CNSP Resolution 476/24.
- WHAT IS THE AIM OF THE RESOLUTION?
One of the fundamental points is to align the regulations on remuneration in the insurance, reinsurance, capitalization, and pension industry with those of other regulated sectors. This is the case, for example, with the regulations of the Central Bank of Brazil (Bacen) and the Securities and Exchange Commission (CVM), which regulate the financial system and its institutions, with the aim of mitigating risks to the system generated by inappropriate professional conduct.
- WHICH COMPANIES ARE SUBJECT TO RESOLUTION?
Insurance companies, open supplementary pension entities (EAPCs), capitalization companies, and local reinsurance companies fall under segments S1, S2, and S3. Supervised companies in the S4 segment are not subject to the rules established by CNSP Resolution 476/24.
There are cases in which some rules are relaxed. Companies in the S3 segment, for example, are exempt from setting up a remuneration committee. Companies classified as S2, on the other hand, can use another existing committee to take on the duties of the remuneration committee - they are therefore not obliged to create a specific committee.
- WHAT WERE THE MAIN OBLIGATIONS CREATED?
Supervised companies subject to the new resolution must:
- institute a remuneration policy in accordance with the guidelines established by the new standard. This policy must be approved by January 2, 2026,
- set up a remuneration committee, in accordance with the governance rules established by the resolution and detailed below, and
- publish qualitative information on the remuneration policy, consolidated amounts paid in the previous year, and estimates of amounts to be paid as short- and long-term incentives and exceptional payments, by April 30 of each year (starting in 2026).
- WHICH EMPLOYEES SHOULD THE REMUNERATION POLICY COVER?
The remuneration policy should cover at least
- statutory officers and members of the board of directors,
- other senior management positions, when not statutory - including at least vice-presidents and executive officers,
- key managers in control functions, and
- managers whose actions may have a material impact on society's exposure to risk.
- WHICH PROFESSIONALS SHOULD BE CONSIDERED KEY MANAGERS?
The resolution delegates to the supervised companies the right to establish their own criteria, in their respective remuneration policies, for classifying their employees as "key managers." For this classification, the professional's hierarchical level, decision-making limits, or other similar parameters should be taken into account. The regulation, however, makes it clear that the heads of the risk management, compliance, and internal audit units must be classified as key managers by all supervised companies.
- HOW SHOULD THE REMUNERATION POLICY BE STRUCTURED?
The remuneration policy should be structured taking into account the fixed and variable remuneration modalities practiced, defining criteria for payment, risk adjustment, deferral and vesting, criteria for identifying key managers and those in impact positions. Criteria and guidelines should also be considered for negotiating payments and payment guarantees in the event of an employee being prevented from carrying out another paid activity for a fixed term.
- WHAT RULES APPLY TO VARIABLE REMUNERATION?
Variable remuneration should
- consider the suitability of the remuneration arrangements with the objectives of the resolution[1] and with the level of responsibility of the employee,
- consider the performance of the individual, the unit, and the supervised company as a whole, and
- have risk adjustment mechanisms.
Variable remuneration should also include a long-term incentive portion.
Profit sharing (PLR) and sales commissions are not subject to the above rules.
- IS IT COMPULSORY TO DEFER VARIABLE REMUNERATION?
The resolution stipulates that the long-term incentive must be deferred for at least three years, unless the annual variable remuneration is less than three times the fixed monthly remuneration.
The long-term incentive must correspond to at least the lower of the following values:
- 40% of the total variable remuneration for the year; or
- the difference between the total variable remuneration calculated for the year and the payments made to the respective employee as PLR (or other types of variable remuneration defined in collective bargaining agreements) or sales commissions.
- HOW SHOULD LONG-TERM INCENTIVES BE PAID?
For publicly-traded local supervised companies, at least 50% of long-term incentives must be paid in shares or stock-based instruments.
For local supervised companies that do not have shares traded on the market, long-term incentives may include:
- payments in kind based on the book value of the shares;
- shares - or stock-based instruments - of the direct or indirect parent company of the supervised company, in accordance with the provisions of the resolution.
- DOES THE INSTITUTION HAVE TO COMPLY WITH ANY FORMALITIES IN ORDER TO CREATE A REMUNERATION POLICY?
The remuneration policy must be formally documented in writing, containing clear provisions, with the minimum requirements set out in the resolution.
It should be:
- drawn up by the remuneration committee;
- approved by the board of directors or the general meeting;
- reassessed at least every two years;
- disclosed to all employees by April 30 of each financial year; and
- maintained, for a period of five years, for inspection by the Superintendence of Private Insurance (Susep), as detailed below.
- WHAT ARE THE DUTIES OF THE REMUNERATION COMMITTEE?
The remuneration committee must, at the very least, draw up the remuneration policy, supervise the implementation/operation of this policy, and carry out its periodic evaluation, as well as propose the amounts to be paid.
The committee must be made up of at least three members with the necessary qualifications and experience to assess the remuneration policy. The majority of members:
- may not be an employee covered by the remuneration policy, nor their spouse, partner, or relative,
- must have a maximum term of office - or consecutive terms - of ten years, and
- cannot be a member of other committees, with the exception of supervised companies in the S2 segment.
The composition and operating rules of the remuneration committee, including the number of members, their minimum qualifications, and the length of their term of office must be set out in the internal regulations, approved by the board of directors or, if there are none, by the general meeting. Susep is not required to approve the remuneration committee.
- ARE ALL SUPERVISED COMPANIES OBLIGED TO SET UP A REMUNERATION COMMITTEE?
No. Supervised companies in the S3 segment are exempt from setting up a remuneration committee. In supervised companies in the S2 segment, the duties of the remuneration committee may be assumed by another committee. S4 supervised companies, as already mentioned, are not subject to the resolution.
- WILL SUSEP REQUIRE SUPERVISED COMPANIES TO SUBMIT DOCUMENTS?
Supervised companies do not have to submit any documents to SUSEP every year. However, they must keep the remuneration policy, the recommendations of the remuneration committee, as well as their internal regulations and other documents proving compliance with the resolution at the disposal of the agency for five years.
- WILL COMPANIES HAVE TO CHANGE THEIR CORPORATE DOCUMENTS TO COMPLY WITH CNSP RESOLUTION 476/24?
Yes, supervised companies will have to revise their corporate documents to bring them into line with the provisions of the resolution. For example, approval of the internal regulations and decisions made by the remuneration committee and approval of the amounts to be paid under the remuneration policy should be included as responsibilities of the board of directors, if this is not provided for directly or indirectly in the bylaws.
Supervised companies should also revise their compliance policies or code of ethics and professional conduct to include rules prohibiting the use of capital market derivative instruments capable of altering the effects of price variations in shares or stock-based instruments.
[1] The objectives of CNSP Resolution 476/24 are listed in its article 3:
(i) effectiveness of risk management and compliance with the risk appetite and risk management policy, especially with regard to the exposure limits established therein;
(ii) effectiveness of capital management and compliance with the capital contingency plan, especially with regard to the control levels established therein;
(iii) effectiveness of internal controls and compliance with the compliance policy;
(iv) compliance with the sustainability and conduct policy;
(v) long-term value creation; and
(vi) the attraction and retention of qualified and experienced professionals.
