Amount payable on settlement
According to Art. 90 of the Insurance Contract Act, life insurers are required to buy back life insurance policies on the request of the policyholder in whole or in part, if the insured event is certain and at least three annual premiums have been paid. The provisions governing repurchase must be included in the general conditions of insurance. The life insurer must submit the basis for determining the amount payable on settlement to FOPI. FOPI decides whether the planned amounts payable on settlement are appropriate. The preconditions for this decision are laid down in Art. 127 of the Supervision Ordinance.
Profit sharing of policyholders
Life insurance in Switzerland continues to be based on the collection of gross premiums. These premiums include safety and cost surcharges that are not always needed by the insurer and can therefore be reimbursed to the policyholders in the form of profit sharing.
As part of various new transparency requirements, life insurers must submit an annual justification of the calculation of profit sharing to policyholders. This justification must explain in particular on what basis profit sharing has been calculated and according to what principles the resulting profit shares have been allocated. The transparency requirements for private retirement plans 3a and 3b are laid down in Art. 36 of the Insurance Supervision Act and Art. 136 – 138 of the Supervision Ordinance. The special provisions outlined below apply to occupational pension plans.
Special provisions for occupational pension insurance
Life insurance companies offering occupational pension insurance must set up separate fixed reserves for their obligations arising from occupational pension plans. In addition, they must keep separate annual accounts for occupational pension plans (Art. 37 of the Insurance Supervision Act and Art. 139 of the Supervision Ordinance). On the basis of the legislative provisions, FOPI has developed an accounting formula and accounting requirements for the annual accounts and monitors compliance with the provisions and requirements very strictly.
Furthermore, the supervised life insurers must fulfil special information requirements concerning the insured pension schemes. These information requirements include in particular publication of the annual accounts (Art. 140 of the Supervision Ordinance) and an annual justification of the calculation of profit sharing (Art. 68, para. 4a of the Federal Act on Occupational Old Age, Survivors’ and Invalidity Pension Fund [BVG]). As a minimum requirement for the publication of the annual accounts, FOPI has drafted a publication formula based on the accounting schema for the annual accounts. The annual justification of the calculation of profit sharing must explain on what basis profit sharing has been calculated and according to what principles the resulting profit shares have been allocated.
The new legislation also specifies that at least 90% of the sum of the profit components determined in the annual accounts must be used for the benefit of the policyholders (so-called minimum quota, Art. 37, para. 4 of the Insurance Supervision Act and Art. 147 of the Supervision Ordinance). Insurance contracts with special contractual provisions between the policyholders (insured pension scheme) and the life insurer are an exception to this rule (Art. 146 of the Supervision Ordinance).