Brazil enacts new legal framework for rural insurance

Brazil has enacted Law 15.526, establishing a new legal framework for rural insurance to enhance financial protection for the national agribusiness sector. The legislation transforms subsidies for the Rural Insurance Premium Subsidy Program (PSR) into mandatory expenditures that are protected from budgetary contingency measures.

Key provisions of the law include the reactivation of the 'Fundo Catástrofe' (Catastrophe Fund) to protect the insurance market against extraordinary production losses. The law also allows insurance policies to serve as formal collateral for agricultural credit with more favorable interest rates and stipulates a strict 30-day deadline for the release of insurance indemnities to producers.

The law, which originated from a bill presented by Senator Tereza Cristina, encourages coordination between federal, state, and municipal governments to complement resources for reducing insurance costs. While the law provides significant stability, the Presidency vetoed certain provisions regarding broad federal tax exemptions and the purchase of Insurance Risk Letters by the regulatory fund; these vetoed points are set to return to the National Congress for final analysis.