On 6 July 2016 the Swiss Federal Council launched a consultation on the partial revision of the Insurance Contract Act. The partial revision deals with selected topics of the Act only after a total revision was rejected by the Swiss parliament in 2013. The new provisions to be implemented in the Insurance Contract Act shall, in particular, address consumer protection concerns and also bring the Act up to date with developments since the implementation of the 100-year old Insurance Contract (e.g. new means of electronic communication). The consultation period runs until 27 October 2016.
Background
The Federal Act of 2 April 1908 on Insurance Contracts (Insurance Contract Act) is almost a hundred years old. A partial revision which came into effect on 1 January 2006 satisfied some urgent consumer protection needs. A total revision of the Act that followed shortly thereafter was, however, rejected by the Swiss parliament in 2013. The parliament was of the view that the total revision would go too far. The parliament thus instructed the Federal Council to plan and draft a next partial revision of the Insurance Contract Act. While this instruction included a list of examples that were deemed to be necessary changes, it remained unclear how far the partial revision would actually go. The materials now released for consultation make clear what provisions shall be implemented/amended in the existing Insurance Contract Act.
Topics of the partial Revision
The draft provisions of the Insurance Contract Act released on 6 July 2016 contain the following main changes:
- Withdrawal right: new 14-days withdrawal right for the policyholder;
- Provisional cover: statutory specifications on provisional cover;
- Retroactive cover: significantly extended possibilites to write retroactive cover;
- Limitation Period: extended limitation period (5 years instead of 2 years);
- Termination: new statutory (ordinary and extra-ordinary) termination rights;
- Scope of application: possibility to derogate from the mandatory provisions of the Act for specific large and commercial risks as well as for "professional policyholders" (as defined in the amended Act).
On a more general level, the structure of the existing Act will be slightly amended for the sake of clarity and ease of comprehension. Also, written form requirements in the existing Act will be adapted to today's means of electronic communication (facsimile, e-mail, text messages etc.).
Practical relevance for insurers
While the partial revision of the Swiss Insurance Contract Act is still in an early phase, insurers are well advised to carefully examine what impact the draft provisions may have on their products and operational processes today.
References (in German only)
https://www.news.admin.ch/message/index.html?lang=de&msg-id=62552
http://www.news.admin.ch/NSBSubscriber/message/attachments/44786.pdf
http://www.news.admin.ch/NSBSubscriber/message/attachments/44769.pdf
http://www.news.admin.ch/NSBSubscriber/message/attachments/44772.pdf
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