To combat greenwashing, the Swiss Insurance Association (SIA) has introduced a self-regulation scheme for providers of sustainability-related, unit-linked life insurance products. The new rules must be fully implemented by the end of 2026, which means it’s time to start preparation.
Under the new self-regulation, which covers both organisational requirements and specific rules for the sale of products, sustainability-related unit-linked life insurance products must a) be compatible with one or more specific sustainability objectives or b) contribute to the implementation of one or more sustainability objectives. Regardless of whether option a) or b) is chosen, the sustainability objective must be based on a well-defined reference framework and contain specific indicators that make the objective measurable and able to be monitored.
The self-regulation is a private, autonomous regulation outside the supervisory mandate of FINMA. It’s applicable only to members of the SIA that notify the association of their intent to comply and only to dealings with non-professional policyholders. And it applies only to classic unit-linked life insurance (insurance class A2), unit-linked capitalisation transactions (insurance classes A6.1 and A6.2) and unit-linked tontine transactions (insurance class A7) – in each case only if the product is sustainability-related.
To qualify as sustainable, products must be constructed to ensure that 100% of the premium paid by the policyholder goes to sustainable investments. Both Swiss funds and those domiciled abroad are permitted as underlying investments. Also, the sustainable investment objectives of the insurance product and the underlying fund(s) will have to be aligned and fulfill the same criteria regarding measurability and documentation. Specifics on the funds themselves are outlined in the self-regulation on ESG transparency by the Asset Management Association Switzerland (AMAS). Only products that meet the criteria stipulated in the self-regulation requirements can be offered to clients with sustainability preferences.
Given the complexity involved and the multi-layered life insurance distribution structures that predominate in Switzerland, implementing the self-regulation requirements and training staff appropriately will require a lot of lead time.
What are the main requirements and challenges?
The new SIA self-regulation scheme will affect three main areas: 1) organisational requirements; 2) product manufacturing and issuance; and 3) the sale and distribution of products. Addressing each of these areas will involve specific challenges and key success factors.
The biggest success factor: putting it all together
The key to successfully implementing the SIA self-regulation framework is to consider the different challenges presented by it together. What sustainable products an insurance undertaking intends to offer depends on its client base and how it wants to structure the sales and matching process. The internal know-how and sales personnel training will depend on the planned offering and matching process.
Given the complexity involved and the life insurance distribution channels that predominate in Switzerland, implementing the self-regulation requirements and training staff appropriately will require a lot of lead time. Strategic thought should therefore be given to this topic in 2025, with a clear decision on what the range of such sustainable life insurance solutions should look like in the future.
Summary
PwC can help you transition to a more sustainability-related offering of unit-linked life insurance products with lucrative benefits for both you and your customers. This includes support with designing and issuing products, meeting the necessary organisational requirements, and selling and distributing these products – all in compliance with the SIA’s new self-regulation scheme. Reach out if you feel you need support or would like to discuss any of these matters in more depth.