New requirements for insurance companies in Switzerland

Tied insurance intermediaries are natural or legal persons who work exclusively for one or more insurance company/companies, and sell insurance policies on behalf of this company/these companies. They are in a special relationship of dependence with the insurance company. As of 2024 they may no longer be entered into FINMA's public register as insurance intermediaries, and are assigned to the insurance company to which they are tied. It does not matter whether the tied insurance intermediary works in the office or in the field. Sub-insurance intermediaries who have no direct contact with the insurance company may also be regarded as tied insurance intermediaries. It is therefore essential for insurance companies to understand their entire value chain.

The insurance company must carry out checks before the start of the cooperation as well as ongoing checks as of the start of the cooperation with insurance intermediaries:

Checks before the start of the cooperation:

Detailed checks must be carried out before the start of the cooperation to ensure that all legal requirements are met. The initial check for both natural persons and legal entities, partnerships and sole proprietorships includes the following points:

Ongoing checks:

Once cooperation has commenced, insurance companies must monitor compliance with the regulations by the tied insurance intermediary on an ongoing basis. This includes the following obligations, among others:

• Conflicts of interest: Organisational and contractual measures must be taken via policies and a proper control framework to ensure that improper incentives and conflicts of interest are avoided.
• Training requirements: Compliance with the training and continuous training requirements is mandatory for all insurance intermediaries, and is monitored by the insurance companies.
• Reporting obligations in the event of cyberattacks: Specific reporting obligations in the event of cyberattacks on tied insurance intermediaries must be strictly adhered to.
• Complaints management: Professional management of a complaints management system at the insurance company, which records the complaints received regarding the insurance intermediary activity.
• Risk management and controls: Insurance companies must establish a risk management system that records, monitors and limits all operational risks in connection with intermediary activities. An appropriate risk management system for an insurance company should address the following points:

Untied insurance intermediaries are natural or legal persons who operate on the market independently of an insurance company and are authorised to offer products from various insurance companies. They are legally and economically independent of the insurance companies from which they broker the insurance products.

Insurance companies may only work with untied insurance intermediaries who are entered into the FINMA register for insurance intermediaries. It is the duty of insurance companies to regularly check the status of intermediaries and ensure that they remain registered for the entire duration of the cooperation. Furthermore, the insurance company must also check the status of the natural persons who work for the legal entity, partnership or sole proprietorship. This duty to clarify also extends to unaffiliated sub-intermediaries. For these respective duties, appropriate controls need to be put in place in order to mitigate the risk of being non-compliant with the new regulations.

As with tied insurance intermediaries, the insurance company must have an adequate risk management system and a complaints management system in place.

The expectations expressed by FINMA regarding cooperation between insurance companies and insurance intermediaries must be implemented accordingly. The ISA and the associated ISO require the industry to develop minimum standards for the qualifications and knowledge of insurance intermediaries and to have these approved by FINMA. In a press release dated 23 August 2024, FINMA announced that it had approved the new minimum standards. They will enter into force on 1 October 2024. From August 2025, the new exams for tied and non-tied insurance intermediaries can be carried out in accordance with the new regime. 

FINMA regularly monitors compliance with legal requirements by insurance companies and their intermediaries. This includes both regular audits and random on-site inspections to ensure compliance with all relevant regulations, in particular regarding cooperation with tied and non-tied intermediaries.

PwC Switzerland offers comprehensive advisory services to support insurance companies in the implementation of these new regulatory requirements in connection with insurance intermediaries. Our services include, among others:

• Regulatory advice: Support in the interpretation, application, and impact assessment of the new ISA and ISO regulations, including relevant circulars and guidance notes.
• Compliance program: Identify necessary enhancements and support implementation of changes in compliance program, covering governance, policies and procedures, systems and tools, business processes, training, and management information.
• Due diligence-checks: Review of your insurance intermediaries' compliance with all relevant legal and regulatory requirements.
• Risk management: Development and implementation of risk management systems that records and monitors the operational risks, including the design of appropriate controls to mitigate the risks in connection with intermediary activities.
• Contract management: Review and revision of existing contracts in accordance with the new regulatory requirements.

We also support tied and untied insurance intermediaries to understand the new regulatory requirements applicable to them, enhance their compliance controls, and support them in the implementation process.

Contact us to ensure that your company not only complies with the new legal requirements but also continues to operate successfully and efficiently in the market.

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