The supervision of life insurers encompasses three supervision goals:
I. Compliance with legal and ethical norms by the life insurers
II. Maintaining solvency and securing benefits to policyholders
III. Protection of policyholders from abuse
The main responsibilities in the supervision of life insurers correspond to the responsibilities in all branches of supervision of private insurance, namely :
- Grant of licence for insurance operations
- Review and approval of business plans
- Ongoing supervision of insurance operations
- Review of annual reports
- Review of solvency (Solvency I and Swiss Solvency Test SST)
- Review of reports on fixed reserves
- Withdrawal of licence upon termination of insurance operations
With the exception of occupational pension plans, the rates and general conditions of insurance (GCI) for life insurance policies no longer need to be approved in advance by FOPI. Even though there is no longer an approval requirement, FOPI is still authorised to conduct subsequent reviews and inspections to ensure that the GCI employed conform to law and that the rates employed neither disadvantage the policyholders nor endanger the solvency of the insurance company.
In the area of occupational pension plans, however, the so-called preventive approval requirement still holds. This means that the rates and GCI for occupational pension plans must still be submitted to FOPI before they are offered on the market. FOPI verifies whether the GCI conform to law and whether the premiums fall within a range that protects policyholders from abuse and excessive safety and profit margins and that ensures the solvency of the insurer.
Important elements of life insurance supervision include the monitoring of actuarial reserves and fixed reserves (Art. 16 – 20 of the Insurance Supervision Act (ISA) and Art. 54 – 67 and 70 – 95 of the Supervision Ordinance) and of the solvency margin, i.e. the assets free from any obligation. Art. 23 to 26 and 37 to 40 of the Supervision Ordinance describe how the solvency margin of life insurers is calculated.
The “Life Insurance” division supplements its supervisory function with the inspection of the supervised life insurers. It also responds to requests for information and complaints from policyholders.
In the area of occupational pensions, special coordination and cooperation with the supervisory organs of the Confederation (Federal Social Insurance Office, FSIO) and the cantons is necessary. FSIO and the cantonal supervisory organs supervise institutions offering occupational pension plans.
» See link (upper right) "Supervision legislation" for the legal texts of Life Insurance, namely :
-- Insurance Supervision Act (ISA)
-- Insurance Contract Act (ICA)
-- Supervision Ordinances (SO and FOPI-SO)
New Orientation of Supervision
As part of the new orientation of supervision, FOPI is strengthening risk-based supervision. This manifests itself in particular in the introduction of the Swiss Solvency Test (SST) for all supervised insurance companies, including life insurers (Art. 22 of the Insurance Supervision Act and Art. 41 – 53 of the Supervision Ordinance).
The SST is a supervisory instrument for measuring and aggregating the insurance, market, and credit risks to which an insurance company is exposed. In particular, the supervised life insurers use the SST to estimate capital requirements needed to protect against their risk exposure. The available risk-bearing capital is compared with the estimated capital requirements. The magnitude of the resulting quotient determines different intervention levels. If the threshold is not reached, the supervisory authority seizes appropriate measures.