The Swiss Financial Market Supervisory Authority FINMA has opened the consultation on the new Insurance Bankruptcy Ordinance. This Ordinance is needed because the Insurance Supervision Act only provides a rudimentary framework for bankruptcy proceedings and because FINMA has been responsible for overseeing the bankruptcy of insurance companies since 1 September 2011. The consultation period ends on 30 June 2012.
Since 1 September 2011, FINMA has been responsible for initiating and conducting bankruptcy proceedings concerning companies subject to the Insurance Supervision Act (ISA). The ISA only provides a rudimentary framework for bankruptcy proceedings, so the new Ordinance adds the necessary detail and thus ensures legal certainty and predictability.
The draft Ordinance of the Swiss Financial Market Supervisory Authority on the Bankruptcy of Insurance Companies (FINMA Insurance Bankruptcy Ordinance, IBO-FINMA) is intended to protect insurance policy holders in the event of an insurance company’s bankruptcy. Policy holders' claims that are to be secured by the insurance company using tied assets are especially important here. On the one hand, such claims are to be classified as preferential to other privileged claims (see Art. 219 para. 4 of the Debt Enforcement and Bankruptcy Act for ranking) and settled before the latter (see Art. 54a para. 2 in conjunction with Art. 17 ISA). On the other hand, provision is made for bankruptcy dividends to be paid to policy holders from tied assets in full or in part before to the schedule of claims takes legal effect. This is important because several years may pass before the schedule of claims takes effect after an insurance company goes bankrupt, and policy holders' money would remain blocked until then.
While the Banking Act gives FINMA the authority to issue implementing regulations for the law on both bankruptcy and restructuring as far as banks are concerned, the ISA and thus the draft IBO-FINMA only cover the bankruptcy of insurance companies.
Tobias Lux, Media Spokesperson, Phone +41 (0)31 327 91 71, email@example.com