Insuring industry: the lines of corporate risk

The architecture of an industrial insurance programme

Industrial insurance is a different trade from the mass business of motor and household policies. Its clients are companies with their own risk managers, often advised by international brokers, who negotiate their contracts individually on the basis of detailed underwriting information, site surveys and loss histories. The largest programmes are shared among several insurers, each taking a percentage of the risk under a lead insurer who sets the terms, handles the documentation and coordinates claims. Zurich’s commercial insurance business covers the whole range, from small and medium-sized enterprises through the mid-market to the global corporate clients served by the unit that grew out of the international division of 1976.

The scale of the multinational business today can be measured. According to the group, Zurich served more than 6,400 multinational customers in 2025, issued more than 58,000 multinational policies and covered more than 8,000 international programmes, with a network reaching over 200 territories. It deploys more than 1,000 risk engineers and consultants and more than 3,000 claims specialists. It has offered captive fronting services for some thirty-five years.¹ Its North American business describes more than fifty years of experience with multinational programmes and a “Financial Interest Coverage” clause, developed by Zurich, which covers the parent company’s financial interest in a foreign subsidiary where local law does not permit non-admitted cover of the subsidiary itself. The company states that this approach has become an industry standard.²

The legal logic of these structures deserves a word, because it is easily misunderstood. A master policy issued in Zurich to a Swiss parent company cannot lawfully cover a risk located in a country that prohibits non-admitted insurance. The local subsidiary must then be insured under a local policy issued by an insurer authorised in that country. The master policy steps in only to the extent that the local cover is narrower or lower, and even then often only by indemnifying the parent for its financial loss as shareholder. Tax, regulatory and sanctions considerations follow the same distinction, since premium taxes are levied where the risk is located and payments under the master policy must not circumvent local insurance or foreign exchange rules. Much of the work of a lead insurer, of the broker and of the client’s lawyers in a large programme consists in documenting these allocations correctly.

Property and business interruption

Property insurance for industrial clients covers physical loss or damage to buildings, machinery and stock, together with the loss of profits that follows when production is interrupted. The modern form is an “all risks” policy, which covers every cause of loss that is not expressly excluded, with sub-limits for natural catastrophes, contingent business interruption at suppliers or customers, and extensions for damage to data. In Switzerland the cover for buildings in most cantons lies with the cantonal building insurers, so that private property insurers write the contents, machinery and business interruption risks and the buildings in the cantons without a monopoly.³ Losses from natural hazards in private property insurance are borne jointly through the Swiss elemental damage pool, a voluntary association of private insurers set up in 1936. The Insurance Supervision Ordinance prescribes the scope of this cover and a uniform tariff across the private insurers.⁴

Business interruption is where industrial insurance meets the modern economy of dependencies. When one supplier in a single region fails, production lines across continents can stop, leaving the insurer to face claims from many clients at once. The coverage disputes that followed the pandemic of 2020, which concerned the question whether closures ordered by the authorities caused “physical loss or damage”, showed how much depends on the wording of these clauses and how quickly an unforeseen accumulation can arise.

Liability and the long tail

Liability insurance, the business on which Zurich was built, remains central for industrial clients. General liability cover protects a company against claims by third parties for bodily injury and property damage, including claims arising from its products. The Swiss Product Liability Act of 1993 introduced strict liability of manufacturers for defective products. The insurance market responded with product liability and product recall covers.⁵ Environmental liability, professional indemnity and the liability of financial institutions complete the range.

Liability business is “long tail”: claims may be reported many years after the policy period, and their eventual cost is uncertain. American asbestos and environmental claims of the 1980s and 1990s showed how an insurer’s reserves can be overwhelmed by exposures written decades earlier. For the underwriter, the key contractual choice is therefore the trigger of cover. Under an occurrence trigger the policy in force when the damage occurred responds, however late the claim is made. Under a claims-made trigger the policy in force when the claim is first made responds, subject to a retroactive date and an extended reporting period. Swiss practice uses both. The revised Insurance Contract Act has made the choice more important, as section X below explains.

Directors’ and officers’ liability

Directors’ and officers’ liability insurance (D&O) protects the members of the board and the management of a company against personal liability for breaches of their duties. It is a collective liability insurance taken out by the company for its organs. Cover usually includes both the payment of damages owed to claimants and the defence against unjustified claims, including court and legal costs. The insured persons are typically the members of the board of directors and of the executive management, and in some policies de facto organs who exercise decisive influence without formal appointment. Standard exclusions concern intentional and criminal conduct, claims by public authorities for taxes and social security contributions, contractual obligations and, depending on the policy, claims from the insolvency of the company. Article 14 of the Insurance Contract Act permits the insurer to waive its right to reduce benefits in cases of gross negligence, a waiver that D&O policies commonly contain.⁶ Zurich writes D&O and other financial lines both in Switzerland and internationally. The acquisition of Beazley will considerably enlarge its management liability business. The Swiss legal framework that drives the demand for D&O cover is discussed in section XI.

Cyber

Cyber risk is the newest of the major corporate lines and the one that most tests the limits of insurability. A dedicated cyber policy typically covers the costs of responding to a data breach or a ransomware attack, the loss of income from the interruption of systems, extortion payments where lawful, and liability towards third parties whose data has been compromised. Until recently, however, cyber losses were also covered “silently” by traditional property and liability policies that did not exclude them.

Zurich learned the dangers of silent cyber exposure at first hand. After the NotPetya malware attack of 2017, which affected companies around the world through Ukrainian tax software, the American food company Mondelez claimed more than 100 million dollars from Zurich American Insurance Company under a property policy. That policy covered “all risks of physical loss or damage”, expressly including loss of electronic data caused by the malicious introduction of machine code. Zurich relied on an exclusion for “hostile or warlike action in time of peace or war” by a “government or sovereign power”, since the attack had been attributed to a Russian state actor. The lawsuit, filed in 2018, was settled in 2022 on undisclosed terms shortly before a judgment, which left the question of the war exclusion without an authoritative answer.⁷

A few weeks later, in December 2022, Zurich’s chief executive Mario Greco told the Financial Times that cyber, more than natural catastrophes, would become uninsurable. He called for private-public schemes to handle systemic cyber risks that cannot be quantified, similar to those that exist in some jurisdictions for earthquakes or terrorism, and for measures to curb the payment of ransoms.⁸ The market has since moved towards explicit cyber policies with clearer exclusions for state-backed attacks and failures of critical infrastructure. For a Swiss corporate client, the practical lesson is to review property and liability programmes for silent cyber exposure and to buy dedicated cover whose limits and exclusions are understood by the board.

Captives

Many large industrial groups retain part of their risk in a captive insurer, a subsidiary that insures or reinsures the risks of its parent group. In an international programme the captive typically reinsures the risks written by a fronting insurer such as Zurich, which issues the local policies and cedes most of the risk back to the captive. Zurich has offered such fronting and captive services for more than three decades.⁹ Captive insurance and its Swiss regulation are treated in the fifth chapter of this Part.

Notes

1. Zurich Insurance Group, “Zurich Multinational”, https://www.zurich.com/commercial-insurance/services/zurich-multinational. ↩
2. Zurich North America, “Multinational insurance solutions for large global companies”, https://www.zurichna.com/insurance/multinational/large-global. The page also describes loss pooling programmes that aggregate premiums and losses of foreign subsidiaries under a single master policy. ↩
3. SVV, “Affordable natural perils insurance thanks to the ES pool” (cited above). Private insurers cover buildings in the seven GUSTAVO cantons (Geneva, Uri, Schwyz, Ticino, Appenzell Innerrhoden, Valais and Obwalden) and in Liechtenstein. The cantonal building insurance monopolies therefore exist in the remaining nineteen cantons. For contents, Vaud and Nidwalden also have a state monopoly. ↩
4. SVV, “Affordable natural perils insurance thanks to the ES pool” (cited above). The page describes the ES pool as a joint enterprise of twelve private insurers covering over 90 per cent of the natural perils market, set up in 1936, and states that cover is mandated under Art. 171 ff. of the Insurance Supervision Ordinance (AVO, SR 961.011) with a tariff that is identical for all policyholders. ↩
5. Bernard Degen, “Haftpflicht”, HLS, https://hls-dhs-dss.ch/de/articles/016585/2010-08-12/, which records the extension of liability to product liability in 1993. ↩
6. Christoph D. Studer, “D&O: Kollektive Haftpflichtversicherung für Gesellschaftsorgane”, WEKA Business Media, 9 July 2026, https://www.weka.ch/themen/recht/gesellschaftsrecht/aktiengesellschaft/article/do-kollektive-haftpflichtversicherung-fuer-gesellschaftsorgane/. ↩
7. The Register, “Mondelez and Zurich settle NotPetya cyber-insurance lawsuit”, 2 November 2022, https://www.theregister.com/2022/11/02/mondelez_zurich_notpetya_settlement/. See also Cybersecurity Dive, “Mondelēz settlement in NotPetya case renews concerns about cyber insurance coverage”, November 2022, https://www.cybersecuritydive.com/news/mondelez-zurich-notpetya-cyber-insurance-settlement/636029/. ↩
8. swissinfo.ch, “Cyber attacks set to become ‘uninsurable’, says Zurich chief”, 26 December 2022, https://www.swissinfo.ch/eng/business/cyber-attacks-set-to-become-uninsurable-says-zurich-chief/48161718. ↩
9. Zurich North America, “Multinational insurance solutions for large global companies”, https://www.zurichna.com/insurance/multinational/large-global, which refers to more than thirty years of captive services from single parent captives to cell and group captives. ↩

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.