Insurance business in Switzerland

The government of Switzerland offers a very attractive business environment for foreign investors. Its economic policies and laws highly encourage foreign investors to open companies or subsidiaries in Switzerland. The foremost benefit for entities formed in Switzerland is the provision of comparably lower taxes compared to other first world economies—and its extensive network of trade treaties to circumvent the incurring of double tax schemes with European nations and other countries around the globe.

Swiss companies are very competitive on a global scale. In the services field, particularly in the private banking and insurance sectors, Swiss companies hold a dominant position in the world.

The Swiss citizens give their insurance a significant part of their budget, about 21%, which represents a higher percentage than that recorded in many other countries. Noteworthy, however, that, Swiss insurance companies make more than half of their income abroad, making Switzerland the main European exporter of insurance. An important part of this activity is for reinsurance, with outsourcing contributing 90% of reinsurance contracts. 

Switzerland, an established and attractive insurance center

Major players in the insurance field are present in the Swiss market, generating a considerable business. Many factors contribute to the strength of the Swiss insurance system.

The central position in Europe favors proximity to customers, so the access to the European market is simpler. Moreover, EU branches for reinsurance are not necessary. Political and monetary stability, as well as the fact that it is a dynamic innovation center, gives Switzerland easy access to the European market.

Switzerland has a friendly regulatory and tax environment, with simple and clear regulations. Capital adequacy requirements are realistic and the tax rates are competitive, whether corporate, VAT or personal income tax.

Types of insurance legally required in Switzerland

• Health insurance in Switzerland

Signing health insurance is mandatory. Exempt from this rule are international officials, diplomats, and their family members. Compulsory medical insurance covers 90% of basic medical services and hospital expenses. All persons arriving in Switzerland for a longer period must arrange health insurance within three months. Foreigners who work in Switzerland for less than 3 months and who do not have equivalent insurance must be insured in Switzerland during their stay.

In certain circumstances, it is even required even if a person does not stay in Switzerland. For example, Swiss citizens living in the European Community, Iceland or Norway must get their insurance in Switzerland. Furthermore, EU and EFTA citizens who benefit exclusively from a pension in Switzerland and live in the EU, Iceland or Norway must get their insurance in Switzerland. This rule also includes family members who are unemployed.

• Swiss home insurance

Personal property insurance includes insurance against fire, flood, or other major disasters. The insured amount depends on the number of people living together and the number of rooms. Each insurance company has a recommendation in relation to these criteria.

Building and fire insurance is compulsory in Switzerland and is the responsibility of the building owner.

• Car insurance in Switzerland

Basic car insurance (third party cover) covers damage caused to third parties by using the insured vehicle (physical and material damage and loss of income after the injury). Additionally, this insurance protects the insured's legal interests if there are unmeritorious claims, covering legal and expert fees and is mandatory and regulated by law in Switzerland.

If you opt for complete insurance, comprehensive or semi-comprehensive, it will cover damage to the car insured as well.

• Life insurance

Life insurances cover the disability or death risks or stand in as a provision for old age. A distinction exists between individual insurance (private pension) and collective insurance (occupational pension). Employers or pension funds often provide it as a benefit.

• Travel insurance

Travel insurance covers from basic risks (illness, accidents, and sports injuries) to all travel risks, including loss, theft, or damage luggage, abroad departure cancellation, and airline bankruptcy.

Furthermore, Switzerland is part of the European health insurance equivalence program, so if you are on a temporary journey to another member country, you can get urgent treatment in that country as if you were a local. 

The insurance industry challenge in climate change

Insurers have an important role to play in discussions about climate change. From one point of view, they insure risks that are increasingly difficult to assess due to climate change. In addition, insurance companies are important investors that can make a difference through sustainable long-term investments. Of course, both the role of the insurance industry and the various scenarios are examinable.

In 2018, CO2 emissions were higher than ever, although awareness of climate change is increasing. According to the Paris Agreement, limiting global warming should occur at a temperature of 1.5 ° - 2 ° Celsius. In order to achieve these goals, profound changes will be needed in the economy and society so CO2 emissions will need to be reduced by 33 -50% over the next 12 years.

It is very likely that by the end of this century the temperature will rise by 3 ° to 4 ° Celsius. Moreover, such a development could lead to rains that are more frequent, sea level rise or extreme heat in some areas. If the temperature rises above 5 ° Celsius, many risks may no longer be insurable.

Registering an insurance company in Switzerland

The legal steps that investors who want to open a company in Switzerland have to follow are the same as those in other countries of the European Union, but of course, there are also differences.

The first step you need to make as an investor is to choose a trading name for your company and a business structure to represent it. Then you need to open a bank account in which to deposit a minimum capital, which may vary depending on the type of business form. It is important to note that in the case of a corporate bank account, deposit the amount in an escrow account in a bank regulated by the Swiss Federal Law on Banks and Savings Banks.

Documents for setting up the company must be submitted the Commercial Registry after they have been notarized at a public notary. After that, the company must undergo registration with the relevant tax authorities, the Federal Tax Administration, for Value Added Tax, and the Social Insurance System. Our specialists in opening an insurance company in Switzerland can provide information related to this issue.

Insurance legislation in Switzerland

The Swiss Financial Market Supervisory Authority monitors insurance companies in Switzerland so that adherence to insurance legislation happens correctly. This, given the fact that there are many business developers and foreign firms who choose to invest in this area, Switzerland offering an attractive business environment. FINMA enjoys a high position in the international regulatory community. Among his clients, the Swiss regulator has a reputation as fair, professional and business-oriented.

The Swiss insurance industry has a significant presence in global insurance markets and relies on proper regulation and monitoring services. The main regulators of this industry are the Federal Insurance Supervision Act and the Federal Ordinance on the Supervision of Private Insurance Companies.

Our team of consultants can help you find out more about the registration of an insurance company in Switzerland and the opportunities of this business. They can provide the highest quality services for small and medium-sized companies wishing to expand their business at the European level, but also for entrepreneurs who want to open their own business.