The Federal Act on Insurance Contracts (“Insurance Contract Act”, “ICA”; CC 221.229.1) governs the relationship between insurance companies and their customers. The insurance contract serves to transfer the risk from the policyholder (or the collective of the insureds) to the insurance company in return for the payment of premiums. Along with the Insurance Supervision Act (“ISA”; CC 961.01), it is one of the most important enactments for the insurance industry.
As of January 1, 2022, it was decided to implement the partial revision of the IPA, by means of which the outdated ICA will be adapted to today’s requirements. This gives insurance companies sufficient time to implement the extensive amendments, particularly in product design, sales, claims settlement and contract termination. The revised law strengthens the rights of the insured and enables contract execution between parties that is adapted to the digital age. This article provides an overview of the changes of this partial revision.
Specifically, the partial revision entails the following significant changes to the ICA:
- Insured persons can now withdraw from their contract without any obligation within a cooling-off period of 14 days (nArt. 2a and 2b). The withdrawal period begins as soon as the policyholder has applied for or accepted the contract. The deadline is met if the policyholder notifies the insurance company of his or her cancellation on the last day of the cancellation period or delivers his or her notice of cancellation to the post office.
- Insurers must fulfill additional information obligations (nArt. 3). For example, it is explicitly stated that the (previous) duty to inform about the scope of the insurance cover also includes information about whether the insurance is a fixed sum or damage insurance. Information must also be provided on the validity in time of the insurance cover, in particular whether and to what extent insurance cover still exists after expiry of the insurance contract.
- The provisional cover note, which is widespread in practice, is now regulated by law (nArt. 9). It is an independent insurance contract which is subject to the ICA. It is sufficient if the insured risks and the scope of the insurance cover can be determined.
- In addition to the written form (with signature), a declaration of termination in electronic text form is now also possible (nArt. 35a), for example by e-mail. This way, the ICA does justice to the realities of e-commerce across the entire value chain. A handwritten signature is thus no longer required. This is also to be assumed for the insurer’s provisional confirmation of cover (nArt. 9). Written form in the sense of Art. 12 ff. CO is still required for assignment and pledging (nArt. 73).
- Insured persons as well as insurance companies may terminate contracts (with the exception of life insurance contracts) with a longer term (more than three years) at the end of the third or each subsequent year with a notice period of three months without waiting for the end of the term (nArt. 35a). This effectively abolishes “adhesion contracts”. Insurance contracts agreed for a term of three years or less are not covered by this regulation. These cannot be terminated prematurely on an ordinary basis, but extraordinary termination under nArt. 35b is also available here, provided there is good cause. nArt. 35a is also irrelevant for insurance contracts for which no specific duration has been agreed and which are thus unlimited.
- In the supplementary social health insurance, the new ordinary right of termination and the right of termination in the event of a claim are available only to the policyholder (nArt. 35a para. 4). This provision reflects the current practice of the insurance companies. Thus, the supplementary health insurer may not terminate the contract after a claim has been made. This is different in the case of collective daily benefits insurance, where both contracting parties have a right of termination (nArt. 35a para. 4).
- Another interesting feature in the country of overinsurance is the policyholder’s option to terminate the most recently concluded contract within four weeks of discovery of unnoticed multiple insurance (nArt. 46b). The policyholder also has a right of termination in the event of a significant reduction in risk (nArt. 28a).
- The so-called insurance-law-obligations (versicherungsrechtliche Obligationen) are usually not obligations (Obligationen) pursuant to the general contract law, but accessory contractual obligations (vertragliche Nebenpflichten). If the policyholder violates an accessory contractual obligation, the insurer can demand compensation for the resulting damage. The reduction of benefits is thus basically an offset of the damage caused. This circumstance is now explicitly taken into account, as the agreed legal disadvantage now does not only occur in the case of a breach of contract without fault, but also if the policyholder proves that the damage was not caused by the breach (nArt. 45). This clarification is to be welcomed, but it still leaves the insurers the option of allowing the legal disadvantage to occur regardless of the degree of fault. This question is therefore likely to continue to occupy the courts.
- Claims arising from insurance contracts are now subject to a limitation period of five years after the occurrence of the event giving rise to the claim, instead of two years as previously (nArt. 46). The insured person can thus assert his claim up to five years after the occurrence of the event giving rise to the obligation to pay benefits. The two-year limitation period continues to apply to daily sickness benefits insurance.
- In liability insurance, the injured third party or his legal successor now has a direct right of claim against the insurer (nArt. 60). In the event of damage, claims can thus be asserted directly against the liability insurance of the damaging party to the extent of the claim for damages. This is despite the fact that the insurance contract was not concluded with him, but with the liable party. But not only the compensation claims of the injured party are covered, but also the recourse claims of third parties (e.g. social insurers). The recourse exclusion clauses that have been common in practice up to now are therefore no longer permissible.
- The insurer’s right of recourse is extended to all liable parties, i.e. not only to those liable in tort, but also explicitly to those liable for breach of contract or strict liability (nArt. 95c para. 2), in analogy to the ATSG for social insurers.
The innovations outlined entail far-reaching changes for insurance companies and make it necessary to review and, if necessary, also adapt internal processes and regulations. One achievement of this partial revision is, above all, the clarification of coordination law issues. However, it is inappropriate that the legislator has failed to address the question of how to deal with general insurance conditions.
Ultimately, however, the partial revision of the IPA represents a sustainable compromise. The amended provisions further improve the position of policyholders, while at the same time successfully addressing the justified concerns of the insurance industry.