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Complex claims under the new insurance law: the central role of claims handling

Impacts for insurers and reinsurers on coverage positions and dispute management

By Keila Manangão, Gabriella Balthar and Marcos Antunes

Law No. 15,040/2024 has significantly changed the handling of complex claims. Its most sensitive point is not only the creation of new rules but also the shift of a substantial part of the insurance controversy to stages preceding a potential dispute. The risk lies in treating this change as a simple procedural adjustment. For insurers and reinsurers, two challenges arise: understanding how this legal framework shifts part of the risks that were previously concentrated in formal disputes to the pre-dispute stage; and, when litigation or arbitration becomes unavoidable, ensuring that the coverage analysis and, where applicable, the indemnity amount are supported by technical grounds and sufficiently robust evidence to withstand judicial or arbitral scrutiny.

In large-risk insurance, complex corporate insurance programs and reinsurance operations, dispute prevention begins before the notice of loss. During underwriting and policy drafting, the scope of risk, exclusions, coverage limits, the insured’s obligations, cooperation requirements, dispute resolution mechanisms and aspects capable of reducing or increasing exposure to future disputes are defined. Technical, contractual and operational details that may appear secondary can make the difference between a sustainable position and a dispute that is difficult to contain.

It is after the notice of loss, however, that the preventive dimension becomes concrete and claims handling takes center stage. This is the phase in which technical, documentary and legal elements are gathered to support a potential payment, coverage denial, limitation of coverage, settlement of the dispute, value recovery or a future judicial or arbitral dispute. The consistency of the insurer’s position depends on how the claim is investigated, documented, communicated and decided from the outset.

Under this new legal framework, claims handling takes on a broader role than that of a mere preparatory stage. Articles 75 and 76 make clear that claims handling is the stage at which the technical analysis of coverage and loss valuation begins to take shape. In addressing the causes and effects of the loss, loss quantification and the development of the elements supporting the insurer’s decision, these provisions reinforce the central role of claims handling in the insurer’s decision-making process. The decision itself, however, remains the insurer’s responsibility, not that of the loss adjuster.

The same rationale appears in Articles 82 and 83, which place greater emphasis on documentation at this stage by addressing the claims handling and loss adjustment report and the grounds supporting any coverage denial. Article 85 completes this framework by preserving an essential distinction: claims handling and loss adjustment do not imply recognition of the obligation to indemnify. The law therefore increases the importance of claims handling without transforming the investigation of the loss into an admission of coverage.

The distinction established in Article 85 is particularly important for large losses. The insurer must investigate, request documents, appoint adjusters, assess causes, quantify damages, communicate with the insured and, where applicable, with the reinsurer, without such conduct being automatically construed as an admission of coverage. The opposite interpretation would create an undesirable effect: the more diligent the claims handling process, the greater the risk of attributing to the insurer an admission of coverage. Article 85 prevents this distortion and preserves claims handling as a technical procedure for verifying the obligation to indemnify.

For this reason, Article 83 also deserves attention. By linking a coverage denial to the disclosure of the grounds supporting it, the law increases the relevance of the documentation produced during claims handling. A denial cannot merely be a conclusion: it must methodically reveal the technical path that led to the insurer’s position. In complex claims, this requirement is likely to directly affect the organization of reports, communications, technical opinions, supporting documents and decision-making records. In addition, the nature of these materials, their purpose, degree of confidentiality, internal circulation and the way they are used to support the denial may affect the application of the sole paragraph of Article 83.

The statutory framework also creates a delicate balance. Claims handling has always been the stage in which technical evidence, the causal link, coverage analysis and the potential basis for recovery are developed, but without constituting an admission of coverage. Under the new legal framework, however, reports, communications, technical premises and grounds become more exposed and may be shared, challenged and scrutinized in litigation. Insurers must therefore investigate thoroughly, document consistently and protect their legal position, without turning the investigation into an automatic admission of liability.

This issue is especially relevant because the new law increases the legal, evidentiary and strategic costs of an inadequate claims handling process. When the cause of the loss, the causal link, the extent of the damage, applicable exclusions or necessary documents are not properly investigated from the outset, reconstructing such evidence in judicial or arbitral proceedings becomes more difficult. Furthermore, a generic, incomplete or poorly substantiated denial tends to be less persuasive to the insured, the third-party claimant, the reinsurer and, subsequently, the arbitrator or judge.

Deficient claims handling may also produce significant procedural and economic effects. The absence of consistent documentation creates greater scope for allegations of delay, inconsistent conduct, lack of transparency or breach of cooperation and good-faith duties. It may also compromise recovery, subrogation, recourse, settlement negotiations and even the cedent’s position vis-à-vis the reinsurer. In complex claims, the first technical narrative regarding the event often influences the entire subsequent development of the dispute. If that narrative is incomplete or inconsistent from the outset, the future defense already begins at a disadvantage, with gaps that are difficult to fill at a later stage.

This is the key to interpreting Article 86. By regulating the deadline for the insurer’s response and requiring an express and reasoned denial, the provision reinforces the importance of diligent and technically consistent conduct in handling claims. Although the provision expressly uses language associated with forfeiture of the insurer’s ability to deny coverage, it should not be interpreted as creating an automatic admission of coverage or as extinguishing the insurer’s substantive right to discuss the existence, scope or limits of coverage. Strictly speaking, this is not the exercise of a discretionary right subject to forfeiture by the mere lapse of time. Rather, in the civil-law sense intended here, the relevant point is not the loss of a unilateral right capable of producing legal effects, but the fulfillment of a duty to act: to handle the claim and communicate the insurer’s position diligently and in a timely manner. A coverage denial, when applicable, is one of the possible conclusions of this procedure, not the expression of a substantive right that would be extinguished solely by the passage of time.

Interpretive caution becomes even more necessary when considering the reality of highly complex cases. Industrial fires, environmental accidents, structural collapses, marine losses, D&O, E&O, liability claims involving multiple parties and events involving facultative reinsurance or large insurance programs are rarely resolved through simple analysis. Investigations generally require specialized expert examinations, third-party documents, technical reports, reconstruction of facts, cause analysis, assessment of the extent of the loss, exclusions, aggravation of risk and potential fraud. The challenge therefore goes far beyond complying with a formal deadline. It lies in producing a diligent, technically consistent and legally sustainable position without allowing time pressure to result in an incomplete or poorly substantiated denial.

For reinsurers, the impact is also significant. Although a reinsurance contract remains autonomous in relation to a direct insurance policy, the way in which the cedent underwrites, handles, documents, communicates and makes decisions on the claim may directly affect the efficiency of reinsurance recovery and the preservation of technical and contractual positions. Articles 60, 61, 62 and 64 reinforce the importance of coordinated action with the insurer. In major claims, the reinsurer should be involved from an early stage. Claims cooperation and claims control clauses, timely notice, strategic alignment and consistency between the wording of the insurance policy and the wording of the reinsurance contract become central governance elements. Without this, the issue extends beyond the insurer-insured relationship and affects reinsurance recovery as well.

In this context, strategic litigation cannot be viewed merely as a reaction to an already established dispute. In cases involving greater technical complexity, potential institutional impact or precedent risk, legal counsel should contribute to building the documentary record from the pre-dispute stage onward. This does not mean turning claims handling into an anticipated legal dispute, but rather ensuring that the technical analysis engages from the outset with the evidentiary, contractual, arbitral and procedural risks likely to arise later. In such cases, the role of litigation counsel is not to replace the adjuster, but to help anticipate which arguments, grounds and evidence may later be raised by the insured, the third-party claimant and the reinsurer, and ultimately examined by arbitrators or judges.

Arbitration should likewise not be treated as an automatic solution for every complex insurance dispute. Although it may provide an appropriate forum for large risks, corporate contracts, reinsurance operations and technical disputes, its effectiveness depends on the quality of the prior investigation, the evidence produced, the clarity of the denial, communication with the reinsurer and the drafting of the arbitration clause itself. Choosing a more specialized decision-making forum does not remedy deficiencies in the claim investigation or rectify an inconsistent denial.

The same logic applies to subrogation and other recoveries. Subrogation and recourse rights depend on preserving evidence from the outset. Although this area was long treated as a secondary stage or subsequent to payment of the loss, practice has shown that technically sound claims handling may pave the way for the recovery of substantial amounts. Early identification of responsible third parties, documentation of the damage, causation analysis, determination of fault, verification of other available coverages and economic assessment of recovery measures should all form part of the claim strategy from the beginning. Claims handling therefore ceases to serve only the coverage decision and contributes to reducing net loss ratios and improving the economic efficiency of insurance operations.

Law No. 15,040/2024 therefore should not be read as merely a set of new procedural obligations. In more complex insurance matters, it may intensify disputes or shift them to earlier stages of the insurance relationship. The response to this new situation does not lie in automating workflows, accelerating denials or treating claims handling as a purely administrative step. It lies in structuring a decision-making chain capable of preventing disputes when coverage is owed, sustaining denials when indemnity is not due and preserving the technical and contractual position of insurers and reinsurers from the outset. The issue is not simply deciding faster. It is about deciding better, with technical support, contractual consistency and the ability to sustain the position in the future.

In complex claims, disputes are rarely resolved based solely on the strategy adopted during litigation. They are shaped by a decision-making chain that begins with underwriting and the contractual definition and allocation of risk, gains density in the technical handling of the claim and extends into arbitration or judicial litigation, as well as subrogation and recovery actions. For this chain to function properly, consistent documentation of the cause, extent of damage and coverage grounds is essential, along with coordinated communication with the reinsurer. Litigation should not be called upon to correct insufficient claims handling. The quality of pre-dispute conduct is what determines the ability to avoid unnecessary disputes, discourage unfounded claims and sustain significant positions. Perhaps this is the main practical consequence of the new law: it more clearly exposes the difference between claims handling that is merely formal and claims handling that is prepared to withstand the scrutiny of a dispute.

About the Authors

Keila Manangão is a founding partner at Santos Bevilaqua Advogados. She holds a master’s degree in civil law from the State University of Rio de Janeiro (UERJ), a postgraduate degree in constitutional civil law from UERJ, a postgraduate degree in business law from Candido Mendes University and a law degree from the Federal University of Rio de Janeiro (UFRJ). She has experience in judicial and arbitral disputes involving insurance and reinsurance contracts and cases of high technical and economic complexity. Her practice also includes coverage analysis, claims handling, recovery actions and credit recovery.

Gabriella Balthar is an attorney at Santos Bevilaqua Advogados. She holds a postgraduate degree in constitutional civil law from the State University of Rio de Janeiro (UERJ) and a law degree from the National Law School of the Federal University of Rio de Janeiro (UFRJ). Her practice focuses on strategic litigation, arbitration and coverage analysis.

Marcos Antunes is an attorney at Santos Bevilaqua Advogados. He holds a postgraduate degree in insurance law from the University of Salamanca and a law degree from Candido Mendes University. His practice focuses on complex claims handling, subrogation and credit recovery.