The Insurance Supervision Act (SR 961.01) regulates the federal supervision of insurers and insurance intermediaries in Switzerland. Since its enactment in 2006, it has been subject to only selective amendments. However, developments in recent years have made partial revisions to the act necessary. Therefore, the Federal Council recently issued a consultation draft and invited interested parties to submit their comments.


The consultation draft introduces specific restructuring provisions for insurers. Unlike banks, no independent restructuring laws apply to insurers. Further, practice has shown a need to lower the regulatory requirements for insurers which serve only professional clients.

In the course of the legislative work for the Financial Services Act (FinSA), the legislature decided that the rules of conduct introduced thereby should not apply to insurers; instead, similar rules must be implemented in the Insurance Supervision Act, together with a regulatory and supervisory concept aimed at customer protection.

Further, a new distinction between tied and non-tied intermediaries has been introduced, together with a duty to disclose any compensation obtained from an insurer. The draft also introduces a specific provision concerning Lloyd's.

This article addresses selected aspects of the partially revised Insurance Supervision Act.

Scope of supervision
Under the revised Insurance Supervision Act, insurers which are domiciled abroad and conduct only reinsurance business in Switzerland will also be supervised if they have a branch in Switzerland.

The consultation draft provides for a six-month transition period for Swiss branches of foreign reinsurers to either apply for Financial Market Supervisory Authority (FINMA) approval or cease conducting business via a Swiss branch.

Restructuring insurers
The revised act aims to introduce a legal basis for restructuring an insurer in the event of a crisis (ie, instead of liquidation). Accordingly, a required legal basis for the initiation and execution of a restructuring procedure by FINMA is introduced, as well as corresponding material provisions which govern restructuring and capital measures (eg, transfers of insurance portfolios to another insurer).

Client categorisation and reduced supervisory law requirements
The revised act would introduce a new client categorisation. Insurers that serve only professional clients would therefore benefit from lowered supervisory law requirements (taking into account the proportionality principle).

Under the consultation report, professional policyholders can initiate appropriate security measures and assess the financial stability of their insurer and the details of their insurance contract.

In addition, FINMA can exempt insurers with innovative business models from supervision if:

  • they guarantee the protection of policyholders; and
  • this serves to preserve the sustainability of the Swiss financial centre.

These amendments would give insurers more room for manoeuvre in the use of their financial resources and should strengthen the Swiss financial market.

Rules of conduct
The revisions provide for the introduction of rules of conduct for the insurance industry and the distribution of investment products. These rules of conduct are analogous to those set out in FinSA, whereby the same condition should apply to all financial market players in relation to insurance products. However, the Insurance Supervision Act's rules of conduct take into account insurance intermediaries' and policyholders' specific needs.

Insurance intermediaries
The consultation draft redefines 'non-tied intermediaries' as intermediaries which are in a fiduciary relationship with policyholders and acting in their best interest. All other insurance intermediaries are considered 'tied intermediaries'.

The draft also prohibits insurance intermediaries from simultaneously acting as tied and non-tied. Whereas non-tied intermediaries must register within the federal register of insurance intermediaries, tied intermediaries are no longer entitled to register.

The draft provides for a new duty of non-tied insurance intermediaries to disclose any compensation (eg, commission or brokerage) received by an insurer or a third party in connection with the provision of their services. If an additional fee is charged, the policyholder must explicitly waive any claim for such commission or brokerage.

Lloyd's underwriters
The consultation draft introduces a special provision in order to resolve certain procedural issues relating to specific features of Lloyd's and create legal certainty for any civil and supervisory proceedings, particularly regarding the capacity to sue and be sued.

Additional revisions
The partially revised Insurance Supervision Act also introduces:

  • slightly amended criminal provisions;
  • stronger group supervision;
  • a formal legal basis for the Swiss solvency test; and
  • a licensing requirement for both insurers and intermediaries to join an ombudsman service.


The various comments submitted by insurers and other interested parties during the consultation phase are currently being analysed. Once the partially revised Insurance Supervision Act comes into force, the Insurance Supervisory Ordinance will need to be revised accordingly. However, the respective schedule of the revision process has not yet been published.

For further information on this topic please contact Markus Dörig or Alexandra Bösch at Badertscher Attorneys at Law by telephone (+41 44 266 20 66) or email ([email protected] and [email protected]). The Badertscher Attorneys at Law website can be accessed at www.b-legal.ch.