The development of infrastructure plays an essential role in the economic and social growth of any country. In Brazil, these ventures are usually characterized by high investments, long duration, and significant risks, which makes it essential to adopt mechanisms that ensure their viability and continuity. In this context, insurance emerges as a strategic tool to mitigate uncertainties, protect invested capital, and provide legal and financial security to all parties involved.
1. Structure and organization of the national and international insurance and reinsurance market
The international insurance market plays a strategic role in global economic stability, offering protection against financial, property, and social risks in an increasingly volatile environment. In 2024, the sector reached a significant milestone, generating €2.424 trillion in global premiums in the Property & Casualty (P&C) insurance segment1. This volume reflects not only the growing demand for protection against climate, cyber, and geopolitical risks, but also the resilience and relevance of the sector as a foundation for sustainable development and economic security for states, companies, and individuals around the world.
In this context, Brazil ranks 13th in the ranking, with total premium income in the P&C insurance segment of €22.4 billion.
To better understand this position and the factors that influence its performance, it is essential to analyze the structure of the National Private Insurance System (SNSP), identifying the main players in the Private Insurance Policy (PSP).
The insurance market in Brazil is regulated by the National Council of Private Insurance (CNSP), which is linked to the Ministry of Finance. The CNSP, formed by representatives of the federal public administration, performs regulatory functions by defining guidelines and standards for private insurance policy in Brazil. Among its duties, as set forth in Art. 32 of Decree-Law No. 73/1966, are the establishment of general policies for the insurance and reinsurance sectors, as well as the regulation of the creation, organization, operation, and supervision of insurance companies and insurance brokers.
The Superintendence of Private Insurance (SUSEP) is a federal agency linked to the Ministry of Finance, which, in accordance with Art. 36 of Decree-Law No. 73/1966, has as its main functions the implementation of the policy established by the CNSP, the regulation of the insurance market, exercised through the issuance of instructions and circulars, and the supervision of insurance companies, reinsurance companies, and insurance operations.
In this context, companies authorized to operate in private insurance, i.e., insurance companies, which must be incorporated as joint stock companies (Art. 72 of Decree-Law No. 73/1966, in conjunction with Art. 25 of Law No. 4,595/1964), responsible, among other things, for the sale of insurance.
In summary, in light of Article 757 of the Civil Code2, through the insurance contract (policy), insurers assume the obligation to guarantee the legitimate interests of the insured or beneficiary against risks predetermined in the contract, in exchange for the receipt of the premium. Law No. 15,040/2024, known as the Insurance Contract Law, which will come into force on December 9, 2025, provides a similar definition in its Art. 1.3
With regard to the constitution and operation of insurance companies, they are subject to prior authorization to operate, as provided for in Art. 74 of Decree-Law No. 73/19664 and in the sole paragraph of Article 757 of the Civil Code5, ratified by Law No. 15,040/2025, in its Art. 2.6 This authorization is granted based on criteria defined in Decree No. 60,459/1967 and the rules of the National Council of Private Insurance (CNSP). Among the requirements evaluated for granting the license are: minimum capital requirements, regular incorporation, and organizational structure of the company, which must be capable of adopting accounting procedures in line with the standards set by the CNSP, thus ensuring transparency in operations.
Also within the scope of the SNSP, reinsurers play an important role in mitigating the large risks assumed by insurance companies. In summary, through reinsurance, insurance companies transfer some or all of the risks assumed from policyholders to the reinsurer. Risk spreading can also be structured among reinsurers in an operation called retrocession.
Such operations contribute to the development of the insurance market, making it more accessible and reliable, insofar as, according to Poletto (2021), they expand the economic capacity of insurance companies to assume risk.
Reinsurance and retrocession activities are also regulated by SUSEP, as recommended by CNSP Resolution No. 168/2007, which establishes the requirements for the establishment and operation of reinsurance companies.
Finally, the SNSP also includes licensed brokers, who act as intermediaries in the contracting of insurance and reinsurance, in exchange for a fee paid by the insurance companies known as a brokerage commission.
The exercise of this activity requires insurance brokers to hold professional qualifications, obtained by passing a technical and professional aptitude test, pursuant to Art. 2 of Law No. 4,595/1964. In this regard, a licensed insurance broker is prepared to provide the necessary information to the insured and advise them on the insurance they wish to purchase.
Due to its highly regulated structure and robust supervisory and oversight mechanisms, the Brazilian insurance market offers the legal and financial security essential to the viability of large projects. This institutional solidity contributes directly to strengthening strategic sectors of the economy, such as infrastructure, which depends on predictability and risk coverage capacity to attract capital, meet schedules, and ensure the continuity of projects. Thus, the synergy between the insurance market and the infrastructure sector becomes a key element in promoting sustainable development, private investment, and the modernization of national infrastructure.
1 Data from the “Allianz Global Insurance Allianz Trade Report 2025: Rising demand for protection”, 5/27/2025.
2 Civil Code, Art. 757. Under the insurance contract, the insurer undertakes, upon payment of the premium, to guarantee the insured’s legitimate interest in relation to a person or thing against predetermined risks.
3 Law No. 15,040/2025, Art. 1 Under the insurance contract, the insurer undertakes, upon payment of the equivalent premium, to guarantee the legitimate interests of the insured or beneficiary against predetermined risks.
4 Decree Law No. 73/1966, Art. 74. Authorization to operate will be granted upon request signed by a legal representative of the interested parties and submitted to SUSEP, in accordance with the administrative procedure and requirements established by the CNSP.
5 Civil Code, Art. 757, Sole paragraph. Only entities legally authorized for this purpose may be parties to insurance contracts as insurers.
6 Law No. 15,040/2025, Art. 2 Only entities that are duly authorized under the law may enter into insurance contracts.
2. Infrastructure – Public and private procurement
Infrastructure works can be carried out by both public and private entities, each following their own legal regimes and procedures, which directly influence the structuring of contracts, risk management, and insurance requirements.
Public Procurements
In the public sector, procurement is mainly governed by Law No. 14,133/2021 (Public Procurement and Administrative Contracts Law), which replaced previous rules by modernizing and providing greater certainty to procurement procedures. This law establishes rules for contracting works, services, and concessions, seeking to ensure the best proposal for the Public Administration, with clearer evaluation criteria and risk mitigation instruments.
In addition, there are other specific laws for regimes such as common concessions (Law No. 8,987/1995) and sponsored and administrative concessions (Public-Private Partnerships – PPPs) (Law No. 11,079/2004).
In these contracts, it is common to require financial and contractual guarantees to ensure the execution of the works, the proper provision of services, and the repair of damages, should they occur. Among the guarantees provided are surety insurance, bank guarantees, and cash deposits, with surety insurance gaining prominence due to its more competitive cost and lower impact on companies’ cash flow.
Private Procurements
In the private sector, infrastructure works are contracted with greater flexibility, based on the parties’ freedom of contract, but not completely freely. Infrastructure projects, such as large real estate developments, industrial plants, logistics or energy complexes, are subject to, among other things, specific technical standards, environmental agency requirements, and conditions imposed by financial institutions participating in the financing.
In many cases, financiers and investors make the release of funds conditional on the purchase of insurance to protect the capital invested, prevent stoppages, and ensure the restoration of assets in the event of default.
In addition, large private projects often involve EPC (Engineering, Procurement and Construction) contracts, in which the contractor assumes full responsibility for engineering, equipment procurement, and construction. Thus, in these contracts, risk allocation and the choice of insurance policies are used to ensure the continuity of the work and avoid losses to the parties involved.
In this context, insurance is no longer just a contractual requirement but has become part of the business strategy itself, serving as a fundamental tool for strengthening the credibility of the project, protecting cash flow, and attracting investors and partners. The careful definition of the most appropriate policies for each type and stage of construction and the correct combination of contracted coverage are therefore decisive in ensuring the safety and viability of infrastructure projects and protecting the parties involved against material losses, third-party liabilities, and contractual risks, thereby strengthening the financial sustainability of the project — a topic that will be discussed in detail below, with a presentation of the main types of insurance commonly used in the sector.
3. Main types of insurance used in infrastructure projects
Policies are the instruments that formalize insurance contracts, which, as we have seen, are essential for mitigating risks in infrastructure projects and are usually required by both public agencies and private investors and financiers.
Among the various policies used to mitigate risks in infrastructure projects, two broad categories stand out: property and liability insurance and surety insurance. These modalities play a central role in protecting infrastructure works, providing support from the execution phase to accountability for any failures.
3.1. Damage and Liability Insurance
In infrastructure projects, damage and liability insurance act as fundamental pillars for the financial and legal protection of those involved, both in public and private works. They are hired to mitigate direct material losses, cover liabilities arising from accidents and failures, and ensure the financial continuity of the project in the face of unforeseen events, among other things.
These policies can offer coverage during the physical execution of the work, ranging from damage caused by external factors (such as bad weather) to events attributable to human or technical failures. At the same time, they can also cover civil liability risks, especially in cases of damage caused to third parties – which may include neighbors, passers-by, or even the environment.
With regard to civil liability insurance, it is also possible to take out coverage for legal expenses and defense fees arising from any formal claim made by an injured third party.
Among the main branches of this group, the following stand out:
Engineering Risk Insurance: Engineering risk insurance aims to guarantee compensation for losses caused by accidents occurring during the construction, installation, or assembly of machinery and equipment. It aims to protect the insured party’s legitimate interests against sudden and unforeseen accidents resulting in damage or loss to the works described in the policy and to the materials used, or to machinery, equipment, and metal structures installed.
In other words, this insurance covers material damage to the work itself during its execution, assembly, and testing. Typical coverage includes damage caused by natural phenomena (floods, strong winds, lightning), errors in execution, previously unidentified design flaws, fires, explosions, and accidents at the construction site.
It is usually required by financiers and regulatory agencies, as it guarantees the replacement of damaged assets without compromising the schedule or economic viability of the project.
Currently, this insurance line is governed by SUSEP Circular No. 620/2020.
General Liability Insurance: General civil liability insurance is intended to protect the interests of the insured party who is held liable for damages caused to third parties and is required to compensate them, either by court order or arbitration award, or by agreement with the injured third parties, with the consent of the insurer, provided that the provisions of the contract are met.
In summary, therefore, this insurance, within the scope of infrastructure works, is intended to compensate for unintentional damage caused to third parties directly related to construction activities. Common situations include materials falling on neighboring properties, accidents involving pedestrians, among others.
The purchase of this policy, therefore, acts as a mechanism capable of preserving the company’s image, preventing costly litigation, and complying with contractual requirements, especially in construction projects in urban areas or areas with higher social and environmental risks.
Currently, this branch of insurance is governed by SUSEP Circular No. 637/2021.
Professional General Liability Insurance: Professional general liability insurance is intended to protect the Insured against “risks arising from civil liability related to the provision of professional services, which is the object of the insured’s activity.”
In a construction context, this insurance is intended for engineers, designers, architects, and other technical professionals, protecting them against claims for errors or omissions that cause financial losses to third parties. This is especially important in projects with high technical complexity, where calculation or specification errors can lead to significant losses.
This insurance line is currently covered by SUSEP Circular No. 637/2021.
Environmental General Liability Insurance: The environmental general liability insurance is intended to provide coverage against “risks arising from civil liability related to environmental damage.”
Thus, this insurance covers environmental damage caused accidentally during the execution of the work, whether due to leaks, improper waste disposal, soil or water contamination, or uncontrolled atmospheric emissions.
In addition to complying with legal requirements imposed by environmental and regulatory agencies, the policy may include coverage for remediation costs, third-party damages, and administrative and criminal liability. It is recommended for projects with high pollution potential, such as road, port, industrial, and energy projects.
This insurance line is also currently provided for in SUSEP Circular No. 637/2021.
Domestic and International Transportation Insurance: Transport insurance is intended to guarantee the integrity of materials, parts, supplies, and equipment transported to construction sites, both domestically and internationally, by land, air, and water.
Coverage may include theft, damage during transport, accidents involving transport vehicles, among other logistical risks, and is essential in projects involving high value-added equipment or the supply of imported inputs.
This insurance is currently governed by the provisions of SUSEP Circular No. 354/2007.
3.2. Surety Insurance: Main Types and Scope of Coverage
Surety insurance, currently governed by SUSEP Circular No. 662/2022, in summary, is intended to cover losses incurred by the contractor as a result of the contractor’s failure to fulfill its obligations under the policy.
It is an essential tool in infrastructure projects, as it replaces traditional guarantees such as bank guarantees or cash deposits, reducing costs, speeding up approvals, and preserving companies’ credit limits with the financial system.
The main types of surety insurance applicable to infrastructure construction contracts are detailed below:
Bid Bond: This insurance line ensures that the winning bidder will maintain the conditions of the proposal and execute the contract if awarded the contract.
Therefore, once the insurance is taken out, if the winning bidder refuses to sign the contract or provide the additional guarantees specified in the tender notice, the insurer must compensate the public or private contractor for the damages incurred.
Performance Bond: This is a modality contracted concurrently or after the execution of the contract to ensure the full execution of the works, as established by the contract and its documents.
In the event of default by the contractor (abandonment of work, failure to meet deadlines or specifications), the insurer may take over the completion of the project through third parties or compensate the contractor according to the amount defined in the policy.
This type of insurance may also include additional guarantees for fines and/or labor and social security claims in which the Insured is named as a defendant and held liable for the Principal’s debts.
Advance Payment Guarantee: This insurance line protects the contractor in the event that funds are advanced to the contractor but there is no corresponding consideration in the form of work, services, or purchase of materials, as agreed.
In this scenario, once it has been demonstrated that the advance payment was effectively granted to the contractor and that the consideration for the advance payment was not amortized as agreed, the insurer must compensate the contractor for the losses suffered in the form of a refund of the unamortized amounts.
Payment Retention Guarantee: Usually used in infrastructure contracts as a form of financial protection, this method is intended to replace the retention that the contractor might make on installments of the payment to the contractor, allowing the total amount of the payment to be released.
In this modality, the contractor receives the full amount of the payment due by the contractor, and the insurer is responsible for indemnifying the contractor for losses that would eventually be guaranteed by the retention, as provided for in the contract.
4. Conclusion
Insurance is more than just a risk transfer tool: it is a real instrument for enabling and structuring infrastructure projects. Its presence throughout all stages of the project – from the bidding phase to operation – reinforces the reliability of contracts, protects the assets involved, and strengthens the relationship between contractors, financiers, investors, and operators.
Given the technical and legal complexity of infrastructure projects, the right combination of damage insurance, civil liability, and contractual guarantees is a strategic advantage. By mitigating uncertainties, avoiding litigation, and ensuring the continuity of construction projects even in the face of unforeseen events, insurance plays a central role in building a safer, more attractive, and more resilient business environment, which is essential for the country’s growth.
REFERENCES
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Authors: Débora Schalch, Gabriel Ramos Casali, Juliana Zukauskas e Tatiana Algodoal Rosa
Schalch Sociedade de Advogados – SSA
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