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Dominique Lecocq and Lucile Hostettler touched on what foreign insurance companies marketing in and from Switzerland need to know in order to be compliant with latest FINMA practice, the current and the upcoming legislative changes.
The Marketing and doing Foreign Life Insurance Business in and from Switzerland webinar discuss:
1. Attractiveness of Switzerland for doing insurance business
- Switzerland is a meeting point.
- Switzerland is a “distribution” market.
- Tax optimization.
- Estate planning.
2. Doing insurance business in Switzerland—an evolving definition
- Life insurance and insurance business in Switzerland is defined as one natural or legal person domiciled in Switzerland is the policyholder or insured person; regardless of the manner and place of conclusion of the contract and regardless of the accounts’ location.
- Direct insurance: Insurance companies with their registered office abroad but no branch office in Switzerland are not subject to supervision if they carry out. Risks located abroad.
- Reinsurance in Switzerland is not subject to authorization in Switzerland.
3. Selling foreign wrappers in or from Switzerland
Since FINMA is a global regulator, we would expect similar rules for similar business. This is not the case.
4. Targeting Swiss residents—limits and safe harbours
- One Swiss policyholder is enough to trigger the licensing requirement–no minimum threshold as exemption.
- There is no investor profile exception.
- There is no minimum business threshold.
- There is no de minimis thresholds as exemption.
5. Life insurance wrappers—EU definition vs. Swiss definition.
6. Past practice and current practice.
- Former Federal Office of Private Insurance vs Federal Banking Commission vs Tax ruling.
- Lighter regime—doing insurance business “from” Switzerland.
- The Swiss branch of a foreign life insurance undertaking limited to marketing.
- Can FINMA creates or grants safe harbours?
- Is an old ruling issued by FINMA still valid?
- What are the consequences of a regulatory breach?
7. The myth of the residents under a Swiss tax lump sum regime—is there any loophole?
- Recent tax decision reconsiders the residency in Switzerland of lump sum tax payers.
- FINMA does not recognize any special residential regime for lump sum taxpayer.
- What is the validity of life insurance contract already signed?
- Regulatory consecuenses.
- What can be done?
8. The case where the life insured is in Switzerland
9. The Swiss representative of foreign policy holders
- Where no risk is borne by an ultimate Swiss person.
10. Revising the spectrum of the light license
- In order to match FINMA’s willingness to comply with the law, avoid loopholes, maybe a lighter regime should be negotiable.
11. Life-insurance product vs financial instrument
- FINMA does not accept any loophole regarding the insurance supervision in Switzerland.
- Application of the Federal Act on Financial Services of 16 June 2018 (“FINSA”) and its specific code of conduct (categorization, information and disclosure, appropriateness and suitability).
12. Draft Revised Insurance Supervision Law. What will change?
- Specific obligations for “qualified life insurance”, i.e. when the policy holder bears a risk of loss in the savings process, as well as in capitalization and tontine operations.
- Exemption by FINMA from a number of obligations (but no exemption) for professional policyholders (obligation to hold an organisation fund, tied assets requirements, affiliation with an ombudsman).
- Insurance intermediaries who offer insurance of a minor importance and complements a product or services will be exempted.
- The Federal Council may exempt small size insurance companies form FINMA supervision, in particular to guarantee the sustainability of the Swiss financial centre.
- More precise definition of “insurance business in Switzerland” as per ISO.
- The project was accepted by the National Council on 3 May 2021 and will be submitted to the Council of States on December 2021. The entry into force is expected for 2023.
- Specific modalities to be detailed in the ISO by the Federal Council as a second step.
On the 1st of January 2006 the Swiss Federal Act on Supervision of Insurance Companies (“ISA”) which governs the Swiss Federal Government’s supervision of insurance companies and intermediaries came into force. Over the last few years, there have been many developments such as the Financial Services Act (“FinSA”), the revision of the ISA and its implementing ordinance (“ISO”) which was followed by other changes in existing regulations. In October 2020, the Swiss government proposed the draft ISA which included new provisions that affect insurance intermediaries and their customers. The draft ISA faced its first barrier this year on 3 May 2021 where one of the two parliament chambers, the National Council, re-adapted the draft ISA by excluding provisions relating to a new ombudsman’s office. Now, the proposed law will have to be approved by the second chamber of the parliament, the Council of States and this legislative process is still ongoing today.
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