Non-insurance business only as an exception

FINMA can authorise insurance companies to be involved in non-insurance business as long as the interests of insured persons are not jeopardised.
The section entitled "Object of the company" in Article 11 ISA regulates the activities that an insurance company can engage in. Besides actual insurance business, an insurance company can only perform activities which are directly related to this business. Insurance companies may only perform non-insurance business in exceptional cases and with FINMA’s authorisation.

Problematic definition

It can be difficult, however, to distinguish precisely between insurance and non-insurance business. Insurance business clearly includes essential functions (e.g. accounting, investment/management of the company's own assets and IT) which go beyond insurance as such. As a rule, however, financial and capital market transactions which do not relate directly to fulfilling insurance contracts or other standard operational activities are an indicator of non-insurance activities.

Protecting insured persons

The aim of the legislation is to prevent the interests of insured persons being jeopardised by risks stemming from unsupervised business areas. FINMA will not therefore issue a licence unless an insurance company can explain the reasons for its proposed activities. This explanation must include not only the relevant commercial considerations, but also a qualitative and quantitative risk assessment. Only business activities which are of limited scope or subordinate importance will be considered.

Restrictive interpretation

At present, exceptions are permitted in a very small number of cases. A more liberal interpretation of the law would be problematic in view of the potential risk to the rest of the business. This has been more than confirmed by developments in international financial markets. FINMA's licensing practice therefore remains extremely restrictive.