Doing Business in Brazil

38. Infrastructure



The need to develop the infrastructure industry in Brazil, combined with the technical and legal complexity of the related projects, requires that the involved parties conduct a detailed study of the risks involved in its various phases.

Efficient management instruments are necessary for achievement thereof, and it is possible to state that the greater or lesser success of a given project is directly linked to the ability of those involved to identify and measure the risks of the transaction and to correctly allocate them among the various players involved therein.

The mitigation of these risks, especially those related to a default scenario, can occur not only through contractual and management mechanisms, but also through an insurance package structured according to the technical and legal specificities of the project for which it is designed.

In this context, surety bond is presented as an important instrument for the industry, to the extent that it aims to guarantee to principal, the insured of the policy, indemnity for any default incurred by contractor, the Principal.

The taking out of such insurance is usually conditional upon the execution, between the insurer and the Principal, of the so-called counter-guarantee contract, which governs the guarantees offered by the Principal for the purpose of underwriting that particular risk and which will enable reimbursement of the indemnities the insurer may come to pay due to the occurrence of a risk covered by the policy.

It also represents a less onerous form of guarantee if compared to the guarantees traditionally required, such as suretyship or security, insofar as it relieves the contractor’s assets that would be inalienable in said conventional guarantees.

Current Regulations

The surety bond is currently governed by SUSEP Circular No. 662/2022, which establishes “rules and criteria for the preparation and sale” of surety bonds, which came into force on 05/02/2022.

Subject Matter

According to the Circular, surety bonds “are designed to guarantee the principal subject matter against the risk of default of the secured obligations by the Principal”. Therefore, it is an insurance by means of which the insurer undertakes to pay the indemnity, pursuant to the provisions of art. 21, if the Principal fails to comply with the secured obligation, as established in the main subject matter or in its specific law, subject to the conditions and limits established in the insurance contract”.

In this regard, we note that the insured is the “creditor of the obligations assumed by the Principal in the main object”, which may be a person subject to the public or private law system, and the Principal is the “debtor of the obligations established in the main subject matter to the insured”.

In addition, the Circular provides for the possibility of including beneficiaries in the policy, provided that they are related to the secured obligation, which occurs, for example, with financing agents.

The main subject matter, in turn, consists of the legal, contractual, public notice, procedural. or any other relationship that generates obligations and rights between the insured and the Principal, regardless of the name used”, and the secured obligation corresponds to the obligation assumed by the Principal to the insured with respect to the main subject matter and guaranteed by the Surety bond policy”, which may be limited to phases, stages, or partial deliveries of the main subject matter”, in accordance with the provisions of the instrument.

Insurance, therefore, consists of a contract linked to the main subject matter, which shall respect its characteristics, provisions, and specific legislation.

Also according to the Circular, this type of guarantee guarantees “the obligations of the main subject matter, for which the insured person demands coverage”. And that “in the event that the surety bond does not guarantee all obligations of the main subject matter, the policy shall highlight this information, in addition to clearly and objectively describing the exact secured obligations”.

Also in this regard, the Circular provides that risks excluded from the insurance are (i) default of secured obligations resulting from acts or facts for which the insured is responsible and which have decisively contributed to occurrence of the claim” and “default of obligations of the main subject matter that are not the responsibility of the Principal”, in addition to other situations duly described in the policy conditions.

Main Modalities

According to SUSEP Circular No. 662/2022, modality consists of the set of clauses that establish the specific provisions of Surety bond in accordance with the characteristics, provisions, and legislation of the secured obligation”.

Contrary to the provisions of the previous Circular, the current regulation does not list the modalities that may be sold by the Insurers. In this regard, it only establishes the need for each modality sold by the Insurers to observe the characteristics and specific legislation of the main subject matter , in addition to (i) clearly describing the commitment assumed by the Insurer to the Insured, i.e., the objective of the insurance, (ii) establishing rules regarding the expectation, characterization, and communication of the claim, as the case may be, and (iii) clarifying the amounts guaranteed by the policy and the objective criteria and methods for calculating the indemnity amount.

Currently, the surety bond modalities that are sold the most in Brazil to guarantee infrastructure projects are: performer (builder, service provider, or supplier), advance payments, withholding payments, and corrective maintenance.

The performer, as a rule, aims to guarantee coverage for the extra cost arising from the Principal’s default, and, with the New Bidding Law, it will play an even more important role in the delivery of relevant works for the development and growth of the country.

And this is due, primarily, to the possibility that the Government, in large-scale engineering projects, which are identified by law as those involving amounts in excess of two hundred million Reais (R$200,000,000.00)1, requires the resumption clause, which will require the regular exercise of the so-called step in rights, which allows the intervention of the guarantor, in this case, the insurer, directly in the project. Please see:

Art. 99. When contracting large-scale engineering works and services, the provision of a guarantee may be required, in the form of surety bond, with a resumption clause provided for in art. 102 of this Law, in a percentage equivalent to up to thirty percent (30%) of the initial contract price.

In this case, therefore, the bid notice may require the provision of guarantee in the form of surety bond and provide for the obligation of the insurer, in the event of default by the Principal, to assume the execution and conclude the subject matter of the contract.

The modality known as advance payment, in turn, guarantees coverage for installments advanced by the insured to the Principal for the purpose of executing the adjusted scope and which are not amortized due to the responsibility of the Principal.

1Art. 6, XXII of the Law.


The withholding, in turn, replaces those withholdings provided for in the contract for a specific purpose and guarantees the payment of indemnity in the event of noncompliance, by the Principal, with the obligation linked to the withholding.

Finally, the corrective maintenance policy guarantees coverage for those items that require maintenance after delivery of the project and which may not be carried out due to the responsibility of the Principal.

All, as seen, have in common the primary objective of promoting completion of the projects they guarantee.

Main Characteristics 

Guarantee Amount

The guarantee amount represents the maximum amount guaranteed by the policy and shall be defined by the insured in accordance with the secured obligation and its specific legislation, if any.


Likewise, the term of the policy shall be related to the term of the secured obligation, unless otherwise provided in the main subject latter or the applicable legislation, when applicable.


With regard to the premium, the Circular establishes that the Principal is responsible for paying the premium, to the extent that it is a policy taken out for the benefit of a third party. Also for that reason, it establishes that the policy remains in effect even if the Principal has not paid the premium within the agreed period.


Deductibles, mandatory participation of the insured, and waiting period

The Circular also provides for the establishment of deductibles, mandatory participation by the insured, and/or waiting period, provided that with express consent from the insured.

Concurring policies

Finally, we note that the Circular prohibits the use of more than one surety bond to cover the same obligation of the main subject matter, with the exception of complementary policies.


In this particular case, the surety bond is taken out at absolute risk, that is, the insurer is fully liable for the amount of the indemnifiable claim, provided that the terms and limits of the policy are observed, and no apportionment clause shall apply.

Expectation, claim (characterization), and communication

Claim expectation

Once a “fact or act that indicates the possibility of characterizing a claim” has been identified, and provided that the policy contains a provision in this respect, the Principal is required to communicate to the Insurer the expectation of a claim foreseen within the scope of the insurance, under penalty of losing the right to indemnity, pursuant to the provisions of the policy.

And this is primarily due to the following:

The main purpose of the surety bond is not the payment of the indemnity or performance of the contract in the place of the Principal, but rather, to seek to avoid the claim, through the management of the risk carried out by the insurer, which monitors the progress of the contract through its own team or through third parties. (ALMADA, 2010)2.

Thus, when it is informed of facts that might jeopardize compliance with the secured obligation, the insurer may cooperate to avoid the accident or minimize the consequences thereof.


Occurrence and Communication of the Claim

The claim, in turn, is occurs “when the Principal’s default in relation to the secured obligation is proven”, and it shall be immediately communicated to the Insurer, as provided by law, for commencement of the adjustment process, under penalty of loss of rights.



Once the claim has been settled and the existence of insurance coverage for the reported claim has been verified, the Insurer may indemnify the Insured by means of (i) payment in cash of damages, fines, and/or other amounts due by the Principal, resulting from the Principal’s default, or (ii) enforcement of the secured obligation.

In this regard, the Circular provides that in the event of extinction of the main subject matter resulting from the claim, “possible credit balances of the Principal calculated with the insured” shall be “used to amortize the indemnity amount “, which is in line with the indemnity principle, according to which the insured cannot profit from the occurrence of the claim.


With regard to termination of the policy, in turn, the Circular provides that it shall take place upon occurrence of one of the events listed below, whichever is earlier: (i) compliance with the obligations guaranteed by the Principal and express consent of the Insured; (ii) settlement between the insured and the insurer; (iii) exhaustion of the guarantee amount; (iv) extinction of the main subject matter; and (v) expiration of the policy.

Large risks

Finally, it is necessary to note that application of Circular SUSEP No. 662/2022 is optional for large-risk surety bonds taken out in accordance with the provisions of CNSP Resolution No. 407/2021, which, in general, provides that policies may be “freely agreed upon” among the Insured, the Principal, and the Insurer, provided that “the basic principles and values” listed in the regulations are observe: (i) broad freedom to negotiate; (ii) good faith; (iii) transparency and objectivity in information; (iv) equal treatment among the contracting parties; (v) encouragement of alternative dispute resolution; and (vi) subsidiary and exceptional government intervention in the formatting of products.


The surety bond is an important instrument for the development of the country’s infrastructure sector, being a good alternative of contractual guarantee, insofar as it relieves the contractor’s assets that would be unavailable under conventional guarantees, enabling the continuity of a project when that same contractor fails to perform its obligations.

For full effectiveness thereof, however, it is important to correctly understand the product and the scope of its respective coverage, and it should be clear that the surety bond will not always have the power to cure all consequences of the Principal’s default.

2ALMADA, Beatriz de Moura Campos Mello. “O Seguro Garantia como mitigador de riscos nos grandes projetos.”. Insurance and Reinsurance – Technical, Legal and Economic Aspects. São Paulo: Saraiva, 2010.

The management of policies, in terms of term, coverage, and good communication with the insurer, in order to keep it informed about relevant facts that may impact the risk that is the subject matter of the guarantee and even as a manner of relying on its expertise to avoid a claim, will contribute to the proper functioning of the insurance, also minimizing the risk of occurrences that may lead to the loss of the right to indemnity.


Authors: Débora Schalch, Tatiana Algodoal Rosa, Juliana Zukauskas

Schalch Sociedade de Advogados – SSA

Avenida Faria Lima, 4509, Itaim Bibi

Postal Code: 04538-133 – São Paulo, State of São Paulo.

Phone: (11) 3889-8996

E-mail: [email protected]