SWITZERLAND Trends and Developments Contributed by: Reto M. Jenny, Andrea Stäubli and Loris Urwyler, Prager Dreifuss AG
Covered Clients and Covered Services in the scope of BFSA Covered Clients First of all, the scope of the BFSA excludes any private client business. Covered Services can only be provided to Covered Clients as defined in the BFSA, Annex 4 (V)(B)(a-c). The following requirements must be met not only at the time of conclusion of the contract, but also at each contractual event relating to the renewal or amendment of an insurance or brokerage contract. Two of the three criteria must be met by the insurer’s or broker’s counterparty to qualify as a Covered Client: • net turnover of more than CHF40 million; • balance sheet total of more than CHF20 million; and • more than 250 employees. Covered Services The BFSA contains a list of services in Annex 4 (III) which fall under the ambit of the BFSA – ie, Covered Services in the phraseology of the BFSA. The BFSA distinguishes between such services that are rendered from Switzerland into the United Kingdom (A) and such that are provided from the United Kingdom into Switzerland (B). In this section, we will outline some of the conditions and limits for the provision of services from the United Kingdom into Switzerland. The provision of insurance cover in certain classes falls into this category (B) which are conclusively list- ed in the BFSA, Annex 4 (III)(B)(a)(i)-(xi) of the BFSA. Accordingly, the BFSA does not cover general liabil- ity insurance, but only liability related to D&O insur- ance, sellers’ and buyers’ warranty insurance in the context of corporate and financial transactions, and cyber risk indemnity for claims made by large enter- prises (BFSA, Annex 4 (III)(B)(a)(x)). Furthermore, life insurance, non-life insurance for accident and health, as well as financial interest cover, are either implicitly or explicitly excluded under this list. Moreover, the exclusion according to Annex 4 (III)(B)(b) of the BFSA prohibits coverage for insurances (i) subject to a Swiss public law regime (ie, building insurance) or (ii) requir- ing a legally enforceable pool participation (ie, road vehicle liability insurance).
Covered Services shall only be provided for risks situ- ated in Switzerland (BFSA, Annex 4 (III)(B)(d)(i-ii)). This is the case when covered buildings and their contents are located in Switzerland, a covered vehicle is reg- istered in Switzerland, or, in the case of short-term travel risks, the policyholder took out the policy in Switzerland. In all other cases, the risk is deemed to be situated in Switzerland if the establishments of the policyholder or its insured subsidiaries concerned are situated in Switzerland (BFSA, Annex 4 (II)(B)(a)-(d)). Furthermore, the scope is limited to coverage of own risks, direct, and consequential losses of Covered Cli- ents and their Swiss subsidiaries (BFSA, Annex 4 (III) (B)(d)(i)). Third-party insurance is excluded. Risks situ- ated in the UK are covered for UK-based subsidiaries if those are referred to as insured in the insurance contract (BFSA, Annex 4 (III)(B)(d)(ii)). Insurance distribution activities by an insurance interme- diary are only covered by the BFSA if the insurance con- tract concerns Covered Services and is supplied by (i) a Covered Financial Services Provider or (ii) by an insurer or branch based in Switzerland (BFSA, Annex 4 (III)(B)(c)). How to get into the Swiss market as Covered Financial Services Provider Material requirements To provide insurance or brokerage services in the Swiss market, material requirements must be fulfilled. The insurer or the broker must (BFSA, Annex 4 (IV)(B)): • be authorised and supervised by the relevant Supervisory Authority under UK law as an insurer or broker; • be incorporated as a Company or formed under the domestic UK law (non-legal entity) or a UK branch of a Covered Financial Services Supplier of Switzerland; and • have already supplied the relevant services in respect of risks located outside Switzerland. To provide insurance services in the Swiss market, an insurer, at an entity level, must meet the following additional requirements (BFSA, Annex 4 (IV)(B)(d)). The insurer shall: • generally be subject to Solvency II, meet the sol- vency requirements without capital relief measures
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