The impact of Covid-19 on the global insurance industry – Switzerland
Lars Gerspacher
Switzerland, GBF Attorneys-at-law
gerspacher@gbf-legal.ch
Roger Thalmann
Switzerland, GBF Attorneys-at-law
thalmann@gbf-legal.ch
Switzerland | |||
General questions | Yes/ No/ N/A | Additional comments, if any. | |
1 | Does the country that you are reporting on follow common law jurisprudence? | No | |
2 | If the answer to the above question is no, does the country you are reporting on follow a civil code? Please describe the judicial system in short. | Yes | Switzerland is a civil law country and, as such, the law recognised as authoritative is statutory law passed by the competent legislature, which may be at the cantonal or federal level depending on what is provided for in the Federal Constitution of the Swiss Confederation. The legislative competence in private insurance lies with the federal state. |
3 | Please provide a brief description of the legal framework applicable to insurance coverage disputes in the country you are reporting on. In so doing, please consider the following questions: | The key source of private insurance contracts is the Federal Act on Insurance Contracts (ICA). Complementary to that, the Swiss Civil Code and the Code of Obligations have to be considered. In an international context the Federal Act on Private International Law Act (PILA) has to be consulted to determine the relevant governing law. | |
4 | Does the insured bear the burden of establishing coverage of a claim, or does the insurer bear the burden of establishing no coverage? Please give a short description of the legal basis in your country. | In principle, the policyholder bears the burden of proof for the coverage requirements. The policyholder is not obliged to provide strict proof in every case. Under certain circumstances, the policyholder may benefit from easing of the burden of proof. In contrast, the conditions that lead to an exclusion of coverage must be proven by the insurer. Both rules of burden of proof result from Article 8 of the Swiss Civil Code. | |
5 | Are coverage provisions in policies interpreted broadly or is there a presumption in favour of coverage? Please give a short description of the legal basis in your country. | There is no rule to interpret policies broadly and the law does not provide for a general presumption in favour of coverage. The most important rule for interpretation is the principle of trust. Based on this principle, a statement made by one party is to be interpreted and understood from the addressee’s objective point of view. | |
6 | Are exclusions interpreted narrowly or is there a presumption against finding that an exclusion to coverage applies? Please give a short description of the legal basis in your country. | Swiss law has no specific rules for narrow interpretation or presumptions against coverage. If an exclusion is drafted very broadly and the meaning is consequently unclear, a good faith interpretation may result in a more narrow interpretation. Wording that can be understood in good faith in different ways, will normally be interpreted in accordance with the understanding of the party which did not draft the disputed clause. For insurance matters, this rule is specifically reflected in Article 33 of the ICA. | |
7 | Are there universally accepted definitions for:
If the answer is yes, please give a short description of each definition and the legal basis for that definition (ie, a rule of law, case law etc). | No | As there do not exist generally accepted definitions for these terms, they are often defined in more detail in the policies. Therefore, as far as such terms are relevant requirements to provide basic insurance coverage under a policy or for the assessment of coverage exclusions, Swiss law focuses on the specific policy wording. If the meaning of a clause is contested by a party, the relevant wording must be interpreted according to certain rules. The starting point of any interpretation is the wording of a clause. The most important rule for its interpretation is the principle of trust (please see our response to Question 5). However, in terms of ‘natural peril’, the Swiss Supervision Act contains a provision in the area of property insurance stating a definition for damages that are considered the result of natural perils. The courts would be likely to take account of such legal definition when interpreting a policy’s wording. |
Loss causation | Yes/ No/ N/A | Additional comments, if any. | |
8 | Did the country that you are reporting about issue lock-down, stay-at-home or no-travel restrictions in response to Covid-19? | Yes | However, the restrictions always applied with the reservation of certain exceptions and were often nuanced in respect of the persons concerned. |
9 | If the answer to the question above is yes, were such orders issued nationally, by state/region or by local city/town. Please give a short description of the issuing authority and the orders issued. | Restrictions were imposed on the one hand by the cantonal governments and, on the other, at the federal level by the Swiss Federal Council. Restrictions related, for instance to the admissibility of personal contacts in the public and the private sphere, the closure of certain businesses or stay-at-home orders. | |
10 | If the answer to the above question is yes, were the lock-down, stay-at-home or no-travel restrictions mandatory or recommended? | Depending on the spread of the virus, the restrictions were at times mandatory orders and at times recommendations. | |
11 | If the country that you are reporting about did issue lock-down, stay-at-home or no-travel restrictions, were those orders suspended or revoked at any point in time? If the answer is yes, please give a short description of the timeline. | Various measures were (repeatedly) ordered depending on the spread of the virus and accordingly put in place and lifted. Many measures were in effect from mid-March to mid-June 2020, then lifted and put in place again from mid-October 2020 to the present. For instance, there were two lockdowns, one from mid-March to mid-April 2020 and another one from mid-January until the end of February 2021. | |
12 | If the answer to the above question is yes, were subsequent lock-down, stay-at-home or no-travel restrictions issued at any point in time? Please give a short description of the timeline. | Please see answer to Question 11. | |
13 | Has the country that you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a ‘cause’ of insured loss? | No | Please see our answer to Question 7. |
14 | Has the highest court in the country you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a ‘cause’ of insured loss? If the answer is yes, please give a short description of the conclusions in the judicial opinions or guidance. | No | There have been no Supreme Court decisions in Switzerland on coverage disputes concerning Covid-19. However, to our knowledge, a first case is currently pending before the Federal Supreme Court. As far as we know, the issue in these proceedings relates to the interpretation of the policy wording and whether such wording was sufficiently clear to exclude coverage for pandemics. Please see also our answer to Question 7. |
15 | If the answer to the question above is yes, did the highest court in the country you are reporting about determine that losses related to Covid-19 were ‘caused’ by the virus? Please give a short description of the conclusions in the judicial opinions or guidance. | N/A | |
16 | If the answer to the above question is no, did the highest court in the country you are reporting about determine that losses related to Covid-19 were ‘caused’ by government lock-down or stay-at-home orders? Please give a short description of the conclusions in the judicial opinions or guidance. | N/A | |
17 | Has the country that you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is an ‘originating cause’ of insured loss? If the answer is yes, please give a short description of the conclusions in the judicial opinions or guidance. | No | |
18 | If the highest court in the country you are reporting about has not issued judicial opinions or guidance analysing whether Covid-19 is a ‘cause’ of insured loss, have other courts in the country issued such opinions? | No | We currently know of several cases relating to property insurance which are pending before the Commercial Court in Zurich. The Court has indicated in the course of settlement negotiations of such a case that in property insurance a coverage claim of an insured requires (at least) the direct impairment of the subject matter of the insurance. Therefore, without such (local) impairment, there is no coverage. Damages resulting from general closure of operations ordered by the authorities to prevent the spread of a disease would not be covered. A decision with a detailed reasoning of the court is still outstanding. |
19 | If the answer to the above question is yes, have courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether Covid-19 is a ‘cause’ of insured loss? Please give a short description of the conclusions in the judicial opinions or guidance. | N/A | Most of the cases are still pending in court. |
20 | If the answer to the above question is yes, do courts in the country you are reporting about hold that losses related to Covid-19 were ‘caused’ by the virus? Please give a short description of the conclusions in the judicial opinions or guidance. | N/A | Please see our answer to Question 7. Whether losses were ‘caused’ by Covid-19 and are covered under a policy depends on the policy wording. Please see also our answer to Question 18 regarding property insurance. |
21 | If the answer to the above question is no, do courts in the country you are reporting about determine that losses related to Covid-19 were ‘caused’ by government lock-down or stay-at-home orders? Please give a short description of the conclusions in the judicial opinions or guidance. | Please see our answer to Question 7. Whether a government decision is relevant to a loss and triggers a coverage claim depends on the policy wording and the purpose of the policy. Please see also our answer to question no 18 regarding property insurance. | |
22 | Has the highest court in the country you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is an ‘originating cause’ of insured loss? | No | Please also see our answer to Question 7. |
23 | If the highest court in the country you are reporting about has not issued judicial opinions or guidance analysing whether Covid-19 is an ‘originating cause’ of insured loss, have other courts in the country issued such opinions? If yes, please give a short description of the conclusions in such judicial opinions or guidance. | No | |
24 | Has the country that you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a covered ‘event’? | No | |
25 | Has the highest court in the country you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a covered ‘event’? Please give a short description of the conclusions in the judicial opinions or guidance. | No | |
26 | If the answer to the question above is yes, did the highest court in the country you are reporting about determine that losses related to Covid-19 were covered ‘events’? Please give a short description of the conclusions in the judicial opinions or guidance. | N/A | |
27 | If the highest court in the country you are reporting about has not issued judicial opinions or guidance analysing whether Covid-19 is a covered ‘event’, have other courts in the country issued such opinions? | No | Please see our answer to questions 7 and 18 regarding property insurance. |
28 | If the answer to the above question is yes, have courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether Covid-19 is a covered ‘event’? Please give a short description of the conclusions in such judicial opinions or guidance. | N/A | |
29 | If the answer to the above question is yes, do courts in the country you are reporting about hold that losses related to Covid-19 are covered ‘events’? Please give a short description of the conclusions in the judicial opinions or guidance. | N/A | |
30 | If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 in the context of loss causation. | There are no specific official sources or authorities. In the Swiss market, however, various expert opinions of authorities and practitioners are circulating, which are time and again referred to in order to assert or defend claims. | |
Aggregation of claims | Yes/ No/ N/A | Additional comments, if any. | |
31 | Does the country you are reporting on permit aggregation of claims arising out of a single originating cause? Please give a short description of the legal basis. | Yes | Whether the aggregation of claims arising out of a ‘single originating cause’ is permitted, depends on what the parties agreed in the policy and how the term ‘single originating cause’ must be understood under the policy. Please also see our answer to Question 7, where it is outlined that in the absence of generally accepted definitions the policies and the definitions included therein are of most importance. |
32 | Does the country you are reporting on permit aggregation of claims arising out of a single cause? Please give a short description of the legal basis. | In that respect we can refer to our answer to Question 31, which applies by analogy. | |
33 | Does the country you are reporting on permit aggregation of claims arising out of a single event? Please give a short description of the legal basis. | We can again refer to our answer regarding Question 31, which applies by analogy. | |
34 | Does the country you are reporting on use an accepted test for determining whether claims can be aggregated? For example, does the country you are reporting on apply to four unities test to determine whether aggregation is appropriate? Please give a short description of the legal basis. | No | |
35 | Have courts in the country you are reporting on issued jurisprudence concerning whether insureds can aggregate claims arising out of Covid-19? Please give a short description of the legal basis. | No | We are not aware of such decisions. |
36 | Has the highest court in the country you are reporting about issued judicial opinions or guidance concerning whether insureds can aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance. | No | |
37 | If the answer to the question above is yes, did the highest court in the country you are reporting about determine whether insureds can aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance. | N/A | |
38 | If the highest court in the country you are reporting on has not issued such jurisprudence, have other courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether insureds may aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance. | We are not aware that the question of claims aggregation has yet to be subject of a court ruling, particularly not regarding Covid-19. However, a court would not be likely to make general statements, but rather try to find a solution based on the specific policy wording and its correct interpretation. | |
39 | If the answer to the above question is yes, do courts in the country you are reporting about permit insureds to aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance. | N/A | |
40 | Do the courts in the country you are reporting on permit an insured to aggregate claims related to multiple properties or business locations arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance. | We have no case law that we could refer to. However, aggregation of claims related to multiple properties or business locations is basically permissible if the applicable policy permits this. Again, the policy wording and how the parties had to understand it, is decisive. | |
41 | Do the courts in the country you are reporting on permit an insured to aggregate claims related to multiple lock-down or stay-at-home orders arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance. | Please see our answer to Question 40, which applies in an analogous manner. | |
42 | Have courts in the country you are reporting on issued jurisprudence concerning whether cedents can aggregate claims arising out of Covid-19? Please give a short description of the legal basis. | No | We are not aware that courts in Switzerland or arbitral tribunals have ruled whether cedents can aggregate claims out of Covid-19. |
43 | If the answer to the above question is yes, have courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether cedents may aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance. | N/A | |
44 | If the answer to the above question is yes, do courts in the country you are reporting about permit cedents to aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance. | N/A | |
45 | If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 and aggregating claims. | Issues regarding the aggregation of claims have not as yet been dealt with much in Switzerland. As far as the issue is mentioned by authorities, again, the policy wording and the requirements provided therein regarding causality between events and individual claims are decisive. To the extent that no solution can be derived from the policies, it remains open to what extent courts will seek for answers by way of comparison of laws. | |
Property damage | Yes/ No/ N/A | Additional comments, if any. | |
46 | Have courts in the country you are reporting on issued jurisprudence concerning whether losses arising from Covid-19 qualify as property damage losses? Please give a short description of the legal basis. | No | Please see our answer to Question 18. |
47 | Has the highest court in the country you are reporting about issued judicial opinions or guidance concerning whether losses arising from Covid-19 qualify as property damage losses? Please give a short description of the conclusions in such judicial opinions or guidance. | No | |
48 | If the answer to the question above is yes, did the highest court in the country you are reporting about determine whether losses arising from Covid-19 qualify as property damage losses? Please give a short description of the conclusions in such judicial opinions or guidance. | N/A | |
49 | If the highest court in the country you are reporting on has not issued such jurisprudence, have other courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether losses arising from Covid-19 constitute property damage? Please give a short description of the conclusions in such judicial opinions or guidance. | N/A | There is currently no case law specifically addressing the question of whether Covid-19 constitutes a property damage. However, please see our answer to Question 18. |
50 | If the answer to the above question is yes, do courts in the country you are reporting about permit insureds to aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance. | N/A | We have no relevant case law. The courts would have to decide on this question based on what the parties agreed in the policy. |
51 | If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 and property damage. | In this context, we can refer to our answer to Question 30. | |
Exclusions | Yes/ No/ NA | Additional comments, if any. | |
52 | Has Covid-19 been deemed a ‘natural peril’ in the country you are reporting on? Please give a short description of the legal basis and relevant jurisprudence. | No | Please see our response to Question 7. From a Swiss perspective the notion ‘natural peril’ does generally not include diseases. |
53 | Has Covid-19 been deemed force majeure in the country you are reporting on? Please give a short description of the legal basis and relevant jurisprudence. | Yes | We are aware of a decision where a tenant was able to demand a reduction in rent when the closure of a businesses was ordered by the authorities. In this decision, the court held that Covid-19 was a force majeure event. However, this did not change the landlord’s obligation to provide an object in working order according to the Swiss Code of Obligations. Because the authorities’ order affected the usability of the rented property, the court granted a rent reduction. |
54 | Is Covid-19 acknowledged as a notifiable disease in the country you are reporting on? Please give a short description of the legal basis and relevant jurisprudence. | Yes | Covid-19 is a notifiable disease. The legal basis is an order of the Federal Department of Home Affairs on the Notification of Observations of Communicable Diseases in Humans. |
55 | Is it common for insurance policies issued in the country you are reporting on to include a pandemic or virus exclusion? Please give a short description of the legal basis and common insurance practice. | Yes | The supervisory authority FINMA has conducted a survey on pandemic exclusions but has not published a respective evaluation. As far as we can assess the situation, pandemic exclusions do not appear to be unusual. The parties may agree on such a clause based on Article 19 of the Code of Obligations, which legally establishes the parties’ freedom of contract. |
56 | Have any courts in the country you are reporting on determined that a pandemic or virus exclusion is void as against public policy in the context of Covid-19? Please give a short description of the legal basis and relevant jurisprudence. | No | As far as we can tell from our experience to date, pandemic exclusions are not considered a violation of public policy in Switzerland. We also would not see how this could be justified from a Swiss perspective. |
57 | Have any courts in the country you are reporting on otherwise determined that a pandemic or virus exclusion is unenforceable in response to Covid-19? Please give a short description of the legal basis and relevant jurisprudence. | Yes | The Commercial Court of the Canton of Aargau rejected a pandemic exclusion clause because it was not agreed with sufficient clarity in the policy. The decision is currently pending before the Federal Supreme Court (see our answer to Question 14). However, Swiss law does not have any generally accepted reasons why Covid-19 exclusions are inadmissible. |
58 | If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 in the context of exclusions. | There are no specific authorities or official guidelines that we could mention, in particular the supervisory authority FINMA has not issued any guidelines. Please see also our answer to Question 59. | |
Regulatory oversight | Yes/ No/ N/A | Additional comments, if any. | |
59 | Have insurance regulators in the country you are reporting on issued directives concerning coverage for claims arising out of Covod-19? Please describe the regulations that have been implemented. | No | The Swiss regulator FINMA has conducted a general survey on pandemic exclusions among insurers. However, FINMA has never published an evaluation of this survey. Moreover, as far as we know, FINMA does not intend to take any measures or make recommendations based on this survey in the market. |
60 | Are regulators requiring or encouraging insurers to provide grace periods to insureds to make payments on premiums? If yes, please give a short description of the legal basis and relevant guidance. | No | Please see our answer to Question 59. |
Government action | Yes/ No/ N/A | Additional comments, if any. | |
61 | Has the government in the country you are reporting on implemented relief measures for losses sustained as a result of Covid-19? | Yes | |
62 | If the answer to the above question is yes, are the relief measures available to both individuals and businesses? | Yes | There were numerous measures in place to alleviate the financial consequences of Covid-19 for individuals and businesses. However, concrete financial support was primarily granted for businesses. |
63 | Briefly describe the types of relief measures available to individuals and businesses. | Types of relief measures related to financial support by way of so-called Covid-19 loans, lease reductions or payments from the unemployment insurance. In addition, there were various support programmes, for example in the cultural or film sector. Further relief related, for instance, to legal extensions of deadlines to pay debts or the stop of sovereign enforcement measures or the suspension of conducting civil proceedings. | |