Industrial insurance under the revised Insurance Contract Act

The revision of 2022

Switzerland’s Federal Act on Insurance Contracts (Versicherungsvertragsgesetz, VVG, SR 221.229.1) dates from 1908 and entered into force in 1910. It was substantially revised by an amending act of 19 June 2020, which entered into force on 1 January 2022 and applies to contracts concluded after that date.¹ The revision modernised the law in several respects that matter for commercial clients. It introduced a right of withdrawal for policyholders within fourteen days, a statutory right for either party to terminate a contract of longer duration at the end of the third year, a limitation period of five years for claims under the contract and new rules on retroactive cover and on the insurer’s duty to inform.² For industrial insurance, however, two changes stand out: the special regime for professional policyholders and the direct claim of injured third parties against liability insurers.

Professional policyholders

The central innovation for the commercial market is Article 98a VVG. It defines a category of professional policyholders who may depart by contract from the semi-mandatory provisions of the act, which otherwise may not be altered to the detriment of the policyholder. The definition includes pension funds, financial intermediaries and insurance companies, public entities with professional risk management and large enterprises that exceed two of three thresholds for balance sheet total, turnover and equity, set at 20 million, 40 million and 2 million francs respectively.³ Certain absolutely mandatory provisions listed in Article 97 VVG remain binding for everyone.⁴

The effect is to divide the Swiss insurance market into two legal zones. For consumers and small businesses, the semi-mandatory rules on information, withdrawal, termination and the consequences of breaches of obligations apply in full. For industrial clients, the parties may negotiate their own solutions, for example on the consequences of a breach of the duty of disclosure before the contract is concluded, on notice periods or on the termination rights after a loss. The rule recognises what the market had long practised: a multinational company advised by a global broker does not need the protection that the legislator grants a consumer and may prefer contractual certainty over statutory protections designed for others. In practice, the policy wordings of international programmes led from Zurich now routinely contain a clause confirming the professional status of the policyholder and specifying which provisions of the act are excluded.

The new regime raises questions that the courts have not yet settled. Commentators have asked, for example, whether the direct claim of the injured third party may be waived in general terms and conditions agreed with a professional policyholder, and whether every semi-mandatory provision may be contracted out.⁵ Because the categories of Article 98a are defined by reference to the policyholder, a group policy taken out by a large parent company may also cover subsidiaries that would not qualify on their own. Careful drafting of the policyholder and insured definitions is therefore essential.

The direct claim against the liability insurer

The second change reverses a principle of long standing. Under the old law, an injured third party generally had no direct claim against the liability insurer of the person who caused the damage, except where a special statute provided one, as in road traffic. The victim had to sue the insured, who then claimed indemnity from the insurer. The victim was protected only by a statutory lien over the insurance claim. Article 60 paragraph 1bis VVG now provides: “Dem geschädigten Dritten oder dessen Rechtsnachfolger steht im Rahmen einer allfällig bestehenden Versicherungsdeckung und unter Vorbehalt der Einwendungen und Einreden, die ihm das Versicherungsunternehmen aufgrund des Gesetzes oder des Vertrags entgegenhalten kann, ein direktes Forderungsrecht gegenüber dem Versicherungsunternehmen zu.” The injured third party therefore has a direct claim within the limits of any existing cover, subject to the defences and objections that the insurer may raise under the law or the contract. For compulsory liability insurance, Article 59 paragraph 3 VVG adds that defences based on gross negligence or intent, breaches of obligations, non-payment of premium or an agreed deductible cannot be raised against the injured person.⁶

The direct claim does not apply to every existing policy. In a judgment of 27 January 2025, the Federal Supreme Court held that contracts concluded before 1 January 2022 are not subject to Article 60 paragraph 1bis. The transitional provision in Article 103a VVG lists the new provisions that apply to existing contracts, a list that does not include the direct claim.⁷ With the renewal of most annual policies since 2022, the practical importance of the transitional question is diminishing, although long-term contracts and claims under older occurrence-based policies will keep it alive for some years.

For industrial liability insurance the direct claim has several consequences. Claimants’ lawyers now frequently join the liability insurer as a defendant, or sue it alone, which brings the insurer into the proceedings from the beginning and may speed up settlement. Where the insured company is insolvent, the injured party no longer depends on the insolvency administrator to pursue the insurance claim. At the same time, the insurer can raise all defences it has under the contract, including exclusions and breaches of obligations by the insured, so that the victim’s claim is no better than the insured’s own cover. For D&O policies, the direct claim raises delicate questions, since the company that bought the policy may itself be the claimant against its former directors and could now proceed directly against the insurer within the limits of cover. The allocation of a shared limit between defence costs and claims by several claimants becomes correspondingly more contentious.

Notes

1. LAW.CH, “LAWNEWS – Revidiertes Versicherungsvertragsgesetz (VVG): Erste offene Fragen”, 22 September 2022, https://law.ch/lawnews/2022/09/revidiertes-versicherungsvertragsgesetz-vvg-erste-offene-fragen/. ↩
2. Schweizerischer Versicherungsverband, synopsis of the partial revision of the VVG (“Änderung vom 19. Juni 2020”), https://svv.ch/sites/default/files/media/documents/2020-06/20200619_Synopse%20Teilrevision%20VVG%20Schlussabstimmung_de.pdf: Art. 2a para. 2 (“Die Widerrufsfrist beträgt 14 Tage”), Art. 35a para. 1 (termination “auf das Ende des dritten oder jedes darauffolgenden Jahres”) and Art. 46 para. 1 (limitation period of five years in place of two). ↩
3. Art. 98a VVG, text as in force 2024, reproduced at swissrights.ch, https://www.swissrights.ch/gesetze/Artikel-98a-VVG-2024-DE.php. Under para. 2 lit. g, a large enterprise qualifies if it exceeds two of the three values (balance sheet total CHF 20 million, net turnover CHF 40 million, equity CHF 2 million), with consolidated accounts applying within a group under para. 3. FINMA, “Business with professional policyholders – regulations from 1 January 2024”, https://www.finma.ch/en/supervision/insurers/professionelle-versicherungsnehmer/, refers to Art. 98a para. 2 lit. b–g VVG for the definition. ↩
4. LAW.CH, “LAWNEWS – Revidiertes Versicherungsvertragsgesetz (VVG): Erste offene Fragen”, 22 September 2022, https://law.ch/lawnews/2022/09/revidiertes-versicherungsvertragsgesetz-vvg-erste-offene-fragen/. The article summarises seven categories of professional policyholders and notes that a large enterprise qualifies by exceeding the thresholds. ↩
5. LAW.CH, “LAWNEWS – Revidiertes Versicherungsvertragsgesetz (VVG): Erste offene Fragen”, https://law.ch/lawnews/2022/09/revidiertes-versicherungsvertragsgesetz-vvg-erste-offene-fragen/, section on open questions. ↩
6. LAW.CH, “LAWNEWS – Neues Direktforderungsrecht des Geschädigten gegen den Haftpflichtversicherer des Schädigers”, 30 March 2023, https://law.ch/lawnews/2023/03/neues-direktforderungsrecht-des-geschaedigten-gegen-den-haftpflichtversicherer-des-schaedigers/, quoting Articles 60(1bis) and 59(3) VVG. ↩
7. Baur Hürlimann AG, “Kein direktes Forderungsrecht (Art. 60 Abs. 1bis VVG) bei vor dem 1.1.2022 abgeschlossenen Versicherungsverträgen”, https://bhlaw.ch/kein-direktes-forderungsrecht-art-60-abs-1bis-vvg-bei-vor-dem-1-1-2022-abgeschlossenen-versicherungsvertraegen/, discussing Federal Supreme Court judgment 4A_189/2024 of 27 January 2025. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.