Distribution by insurance intermediaries

FINMA’s Guidance 05/2024 clarifies FINMA’s expectations of insurance companies with regard to cooperations with insurance intermediaries. These expectations differ between tied and untied intermediary activities.

Tied insurance intermediaries 

Tied insurance intermediaries are legally assigned to the insurance company for which they offer or conclude insurance contracts. This insurance company is directly responsible for monitoring compliance with the statutory requirements of the ISA. These include, in particular, a good reputation and guaranteeing that obligations are met, for example, in the area of customer information (Art. 45 ISA). 

In FINMA Guidance 05/2024, FINMA sets out the audit items that must be complied with before and during the cooperation with tied intermediaries.

Untied insurance intermediaries

Insurance companies may not work with untied insurance intermediaries who do not have the necessary registration (Art. 44 para. 2 ISA). This applies to legal entities, sole traders and partnerships as well as all individuals who carry out the intermediary activity on a self-employed or employed basis, but also to intermediaries with whom the insurance company does not have a direct contractual relationship and where the corresponding relationship only exists indirectly via a chain of untied intermediaries (known as sub-intermediation).

The insurance company also has a general duty to take measures in the event of indications of abuse, in particular if the insurance company is aware that policyholders or beneficiaries are repeatedly being disadvantaged. 

For this purpose, relevant indicators (e.g. cancellations and complaints by the policyholders concerned) must be collected which could indicate systematic misadvice on the part of an untied insurance intermediary.  

Furthermore, the insurance company must ensure that the operational risks arising from the cooperation are adequately captured, limited and monitored (Art. 22 para. 1 ISA). This applies in particular to the exchange of and access to policyholder data.

Verification of compliance by FINMA

FINMA reviews insurance companies’ compliance with their supervisory duties as part of the annual reporting process, among other things, and takes action where necessary.