Since Switzerland is not part of the EU or EEA, insurance companies with their domicile in any EU or EEA member state may not conduct business through a branch office or cross-border on the basis of the EU passport principle and home state regulator regime (with exceptions for the Principality of Liechtenstein). Therefore, insurance companies domiciled abroad intending to engage in insurance activities in or from Switzerland require authorisation from the Swiss Financial Market Supervisory Authority (FINMA) to do so.
Swiss insurance law is currently being revised. In particular, the Swiss Insurance Contract Act ("ICA"; Versicherungsvertragsgesetz), which regulates the relationship between insurance companies and policy holders and insured, has been revised. Various changes have entered into force on 1 January 2022. The following presentation reflects that new situation.
The most important changes concern, among others, (i) the conclusion of the insurance contract (including the introduction of a right of withdrawal), (ii) termination rights, (iii) limitation provisions, and (iv) direct claims rights for third-party liability insurance. The law is also adapted to the requirements of electronic commerce.
The Swiss Parliament is currently also discussing amendments to the Swiss Insurance Supervision Act ("ISA"; Versicherungsaufsichtsgesetz). The partial revision concerns in particular the following amendments: (i) introduction of a restructuring regime, (ii) expanded possibilities for insurers to be fully or partially exempted from supervision if adequate customer protection is ensured, (iii) extension of supervision possibilities, and (iv) amendments of the provisions on insurance intermediaries.
The Federal Assembly passed the legislative proposal in the final vote on 18 March 2022. The consultation procedure on the implementing provisions ended in September 2022. The revised ISA is expected to enter into force in the 3rd quarter of 2023.
An insurance activity in Switzerland exists, regardless of the type of contract and where it is concluded, if:
- a natural person or legal entity domiciled in Switzerland is among the policyholders or insured persons or if
- property located in Switzerland is insured.
A foreign insurer can establish a Swiss branch office if it is licensed to undertake insurance activities in its home country. To qualify for a licence from FINMA, the foreign insurer must meet the respective requirements, including minimum capitalisation, adequate solvency margins and various personal requirements for the staff members. It must further appoint a fully authorised representative who must reside in Switzerland and manage the business of the branch office.
A few narrow exceptions apply to this general rule for insurance companies domiciled abroad with no Swiss branch office: mere reinsurance activities conducted in Switzerland, mere insurance of marine, air transportation, international transports and war risks as well as risks located abroad.
Under another exception, which is in practice hardly relevant, an insurance business which engages in insurance activities in Switzerland which are of little economic importance or which affect only a small group of insureds may, if the specific circumstances justify, be exempted from supervision by FINMA.
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