The Insurance Oversight Act (IOA), which regulates the federal supervision of insurance companies and insurance brokers and which has been entered into force on 1 January 2006, should be revised.
Due to the developments seen in recent years and the related need for adaptions of the act, the Federal Council instructed the Federal Department of Finance (FDF) in 2016 to prepare a draft consultation paper for a partial revision of the IOA. The consultation on the partial revision of the IOA has now been initiated on 14 November 2018 and will last until 28 February 2019.
The proposed revision particularly relates to rules on the restructuring of insurance companies, on the introduction of a client classification and related simplifications of the supervision as well as on the introduction of rules of conduct for the insurance industry and the distribution of investment products.
Restructuring of insurance companies
Since no independent provisions on the restructuring of insurance companies exist in the IOA so far, the revision aims to create a legal basis, to restructure an insurance company in the event of a crisis, instead of having to liquidate it. Such an option of restructuring takes account of international developments but also of policyholders’ interests.
Introduction of a client categorisation
By introducing a client categorisation, insurance companies, which serve only professional clients, who do not require specific protection, particularly benefit from reduced supervisory law requirements. Thereby the principle of proportionality is taken into account. In addition, the Swiss Financial Market Supervisory Authority (FINMA) can exempt insurance companies with innovative business models from supervision if they guarantee policyholder protection and this serves to preserve the sustainability of the Swiss financial center.
Rules of conduct
In the course of the legislative work on the FinSA the parliament has decided, that the rules of conduct of the FinSA are not applicable directly to insurance companies, but shall be included in the IOA. Thus, the revision provides for the introduction of rules of conduct for the insurance industry as well as the distribution of investment products. These rules of conduct are analogously to those of the FinSA, whereby the same conditions should apply to all financial market players for these products.
Impacts on insurance companies
Since the proposed revisions, particularly related to the rules of conduct, involve adapting the internal processes of the insurance companies, the legislative process has to be continuously monitored, in order to adopt appropriate measures at an early stage.
