Federal Office of Private Insurance FOPI
Federal Office of Private Insurance FOPI
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Strategy
The legislative power has deliberately advanced liberalization of the insurance market over the last few years, which has enabled insurance companies to assert themselves in an increasingly competitive environment, also internationally. At the same time, liberalization requires that insurance supervision adopt a strategic orientation allowing the many different challenges posed by an increasingly demanding and complex business environment to be taken into account.
FOPI defines its supervision philosophy through the following key terms: risk-based, principle-based, and competition-oriented:
- The central orientation of supervision is based on a quantitative and qualitative analysis of the risks of insurance companies. This ensures that the claims of policyholders can be met with a high degree of probability. The main goal in this respect is not to prevent insolvencies at any cost. The responsibility of supervision is rather to protect policyholders from the consequences of insolvency.
- The goal of FOPI is to rely on principle-based supervision to the extent possible. The Swiss Solvency Test (SST) as a core element of risk-based supervision is an example of principle-based supervision. This means that the supervisory authority does not insist on compliance with rules and requirements that are generally static and associated with a lot of bureaucracy, but rather it defines overarching guidelines, compliance with which is the responsibility, but which is also in the best interest of the individual insurance companies themselves.
- At the same time, FOPI must ensure that competition in the insurance market works and that its impact is beneficial to all relevant market participants – within the guideposts established by law. From a regulatory perspective, promoting this competition means that the dynamic momentum and ability of the market to regulate itself must be used deliberately to establish supervision that is as efficient and cost-effective as possible. In addition, various transparency requirements help ensure that both supervision and the market are able to undertake an evaluation of the company that is as close to the truth as possible.
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