Switzerland
Answer ... Under Swiss law, neither the Federal Insurance Supervision Act (ISA) nor the Federal Insurance Contract Act (ICA) (SR 221.229.1) contains a legal definition of ‘insurance’ or ‘insurance contract’. However, the concept of ‘the object of insurance’ set out in Article 16(1) of the ISA implies that persons, property and assets can be insured; and accordingly, the ISA distinguishes between personal, property and asset insurance (eg, liability insurance is considered asset insurance). Also inherent in Swiss law is the classification of insurance according to the insurer’s obligation to pay under the policy; therefore, insurance is divided into indemnity insurance and non-indemnity insurance, where the insured is covered for a benefit in the form of the payment of a sum of money that is determined by agreement.
In addition, Annex 1 of the Insurance Supervision Ordinance provides the lines of insurance available in Switzerland. These lines are set out in the table below.
Life |
Non-life (general insurance) |
Reinsurance |
A1 Collective life insurance in the context of pension plans. |
B1 Accident. |
C1 Reinsurance underwritten by reinsurer (no direct insurance). |
A2 Life insurance linked to investment funds’ units. |
B2 Illness. |
C2 Reinsurance for direct insurer. |
A2.1 Capital insurance linked to investment funds’ units, with payment on death or in case of disability. |
B3 Hull insurance for motor vehicles (excluding rolling stock). |
C3 Intra-group reinsurance (captive). |
A2.2 Capital insurance linked to investment funds’ units, with payment or death or in case of disability and guarantee on survival. |
B4 Hull insurance for railway rolling stock. |
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A2.3 Annuities linked to investment funds’ units. |
B5 Hull insurance for aircraft. |
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A2.4 Life insurance linked to internal funds or to some other reference values, with payment on death or in case of disability. |
B6 Hull insurance for naval and inland navigation vessels. |
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A2.5 Life insurance linked to internal funds or to some other reference values, with payment on death or in case of disability and guarantee on survival. |
B7 Cargo insurance (including goods, luggage and all other items). |
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A2.6 Annuities linked to internal funds or to some other reference values. |
B8 Fire and natural hazards |
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A3 Other life insurance. |
B9 Other property damages. |
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A3.1 Individual capital insurance on survival and on death. |
B10 Third-party liability for self-propelled land vehicles. |
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A3.2 Individual annuities. |
B11 Third-party liability for aircraft. |
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A3.3 Other individual life insurances. |
B12 Third-party liability for sea, lake and river vessels. |
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A3.4 Collective insurance on survival outside the scope of pension. |
B13 General third-party liability. |
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A4 Insurance against death and disability resulting from accidents. |
B14 Credit. |
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A5 Insurance against death and disability resulting from sickness. |
B15 Surety |
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A6 Capital redemption operations. |
B16 Miscellaneous financial loss. |
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A6.1 Fund shares bound capital redemption operations. |
B17 Legal services. |
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A6.2 Internal portfolio bound capital redemption operations. |
B18 Tourist assistance. |
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A6.3 Other capital redemption operations |
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A7 Tontines. |
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Insurance undertakings can commence insurance operations as soon as they have been authorised by the Swiss Financial Market Supervisory Authority. The licence can be granted for one or more insurance lines.
Switzerland
Answer ... The legal framework for direct insurance contracts is set out in the ICA, which:
- governs the civil law implications between insurer, policyholder and insured; and
- sets out some rules in respect of aggrieved third parties.
The general provisions of the Code of Obligations apply to the extent that the ICA contains no specific regulation to a particular (legal) issue.
Reinsurance contracts are exempt from the ICA’s scope of application. They are subject to the provisions of the Code of Obligations. Swiss law, however, lacks a legal definition of ‘insurance’ and/or an ‘insurance contract’.
The Federal Supreme Court usually refers to an ‘insurance contract’ as a stipulation of an insurer, in return for payment of a premium, to perform an economic benefit to the insured if an insured risk materialises. Under Swiss law, an insurance contract is therefore considered a synallagmatic contract providing for the transfer of risk in exchange for a premium. It must be distinguished from contracts of gambling and betting, and from guaranties, warranties and sureties.
In practice, direct insurance contracts usually come with the insurer’s general standard terms and conditions (GTCs). Such GTCs take effect:
- if they are specifically referenced on the conclusion of the contract; and
- only to the extent that specific individual agreements do not deviate from the provisions in the GTCs.
The GTCs are also subject to Article 8 of the Federal Unfair Competition Act (SR 241), which provides that a term in the GTCs will be deemed abusive if it creates a significant and unjustified disparity between contractual rights and obligations to the detriment of the insured in a manner that breaches the principle of good faith. This norm empowers the courts:
- to review the contents of GTCs in business-to-consumer contracts; and
- to void any clauses that do not meet the requirements of Article 8.
However, the Federal Supreme Court’s practice implies that it is common sense that insurance contracts contain coverage exclusions. If in doubt, ambiguous terms in GTCs are to be interpreted to the detriment of the party that drafted them. In the GTCs of insurance contracts, ambiguous clauses are thus to be interpreted against the insurer as their author. Article 33 of the ICA sets out the ambiguity rule, in that the insurer is liable for all events that bear the characteristics of the insured peril unless the contract excludes individual events from the insurance in ‘specific, unambiguous wording’. It is thus up to the insurer to precisely limit the scope of the obligations it wishes to assume.
Switzerland
Answer ... The ICA compels the insurer to issue an insurance policy that sets out the rights and obligations of the parties to the contract. The policy thereby assumes the function of evidence.
In principle, Swiss law states that it is the insured which provides the insurer with an offer to bind insurance. The insured is bound to its declaration for a period of 14 days, and it is up to the insurer to accept or decline the conclusion of the contract. The insured is not bound to its declaration if the insured does not accept to bind insurance within the aforementioned 14-day period. On the other hand, the insurer will be deemed to have accepted cover where the insured requests the extension or amendment of an existing insurance contract, if the insurer does not decline such offer. Meanwhile, the insured is also entitled to revoke its declaration to bind insurance only in written form or in any other form that allows the declaration to be recorded in text form (eg, by email), within the same 14-day period.
According to the applicable principles under the Code of Obligations, the genuine will of the parties to the contract is key to any contractual interpretation, including the interpretation of insurance contracts. Thus, a Swiss court must first establish the parties’ real intent, which may differ from their written statements. If the court cannot ascertain the parties’ intentions or if there is no consensus, the court will resort to the parties’ presumptive intent. The court thus objectively establishes how the parties, given all circumstances, could and should have understood the contract’s contested clause or clauses in good faith.
Please also see question 2.2.
Switzerland
Answer ... Please see questions 2.2 and 2.3.
Switzerland
Answer ... The Federal Supreme Court usually refers to an ‘insurance contract’ as a stipulation of an insurer, in return for payment of a premium, to perform an economic benefit to the insured if an insured risk materialises. Under Swiss law, an insurance contract is therefore considered a synallagmatic contract providing for the transfer of risk in exchange for a premium. It must be distinguished from contracts of gambling and betting, and from guaranties, warranties and sureties.
Within the ambit of the ICA, Swiss law departs from the risk declaration paradigm, adhering to the doctrine of utmost good faith and its associated sub-doctrines of representation and non-disclosure. The insurer is responsible for obtaining the necessary information to assess the risk. In respect of the relevant risk factors, the insured must disclose only the information that the insurer has explicitly requested. If the party requesting to bind insurance does not disclose the requested information correctly or represent the risk adequately, or in case of misrepresentation or false declaration referring to a significant fact of risk or material fact, the insurer is entitled to rescind the policy. However, the insurer must rescind the policy within four weeks of the date on which it became aware of the misrepresentation or non-disclosure.
However, the principle of utmost good faith comes into play in reinsurance contracts. The direct insurer must disclose all information needed by the reinsurer to make its underwriting decision. Swiss law does not recognise the English law concept of ‘warranty’.
In addition, an insurance contract may impose additional obligations on the policyholder or insured which apply during the period of insurance or upon the occurrence of the insured event. The insurance contract may also specify the remedies to apply in the event of breach of such obligations, including forfeiture of the claim. According to Article 45(1) of the ICA, however, forfeiture of the claim in the event of breach is in principle considered enforceable only if:
- the breach is not to be regarded as one without fault; or
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the policyholder proves that the breach had no impact on:
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- the occurrence of the insured event; or
- the extent of the benefits agreed in the insurance contract.