INSS and Caixa suspend sale of insurance linked to payroll loans.

The National Social Security Institute (INSS) and Caixa Seguridade , a subsidiary of Caixa Econômica Federal, have signed an agreement to suspend the sale of creditor insurance linked to payroll loan operations offered to retirees and pensioners.

Known as "financial protection" or "credit life insurance," the product is linked to the loan and covers the outstanding balance in case of death, disability, or other situations stipulated in the contract.

According to the INSS (Brazilian National Social Security Institute), the measure aims to guarantee the protection of beneficiaries and the regularity in the granting of payroll loans.

Under the terms of the agreement, Caixa Seguridade committed to:

• temporarily suspend the offer of creditor insurance;
• to prevent commercial linkage between credit and insurance;
• to maintain the release of the loan without requiring the purchase of insurance;
• await the conclusion of the administrative process to reimburse insurance premiums that were improperly charged to retirees and pensioners;
• respect the hiring limit of up to 1.6 times the monthly income from the benefit;
• to repay the amounts borrowed above the contracting limit; and
• Inform the INSS (Brazilian National Social Security Institute) every 60 days about the progress of the refunds.

The suspension will be in effect for 30 days or until the conclusion of the administrative process that will analyze possible irregularities in the insurance claim.

In a statement, the INSS (Brazilian National Social Security Institute) affirmed that the agreement "aims to ensure the protection of beneficiaries' interests and full compliance with legislation in the contracting of payroll loans."

Caixa Seguridade stated that it believes it is in compliance with current regulations, but accepted the suspension "to assess the adequacy of its procedures and cooperate with the investigation process."

Other banks

In June, the INSS (Brazilian National Social Security Institute) suspended new authorizations for payroll-deducted loans to beneficiaries. The decision came after an operation by the Federal Police and the Comptroller General of the Union (CGU) that identified improper deductions made by associations and entities of retirees and pensioners.

In August, the agency canceled technical cooperation agreements with eight financial institutions. In October, four more banks and financial institutions had their authorization for INSS (Brazilian National Social Security Institute) payroll loan operations suspended as a precautionary measure.

On October 30th, the INSS (Brazilian National Social Security Institute) signed an agreement for Banco BMG to reimburse over R$ 7 million that had been improperly charged to approximately 100,000 beneficiaries. The amount will be directly deducted from their bills.