Insurance & Reinsurance 2024

Last Updated January 23, 2024


Law and Practice


Mannheimer Swartling Advokatbyrå AB is one of the leading business law firms in Sweden and advises clients around the world. The firm has offices in Sweden, Belgium, Singapore and the USA, and strives to provide the most high-quality advice in the market, whether a client is an entrepreneurial start-up or a global listed company employing thousands of people. The insurance practice group consists of four partners, one senior adviser and nine associates, and is highly experienced in advising on significant strategic projects as well as day-to-day operations, covering virtually all aspects of the insurance and reinsurance industries. Regular mandates include restructurings, domestic and cross-border distribution, insurance claims and disputes, product development, reinsurance arrangements and regulatory issues, including regulated cross-border transactions such as M&A and portfolio transfers. Clients include insureds, life and non-life insurance undertakings, reinsurers, intermediaries (brokers and agents) and other market professionals.

The Swedish legal system is a hybrid, with similarities to both civil law and common law systems. While statutory law is the primary source, Swedish private law relies heavily on case law. However, when interpreting statutory law, the courts generally give great weight to preparatory works and the intention of the legislator.

There are several key pieces of legislation that apply to insurance and reinsurance undertakings in Sweden, particularly the Insurance Business Act (2010:2043) (the IBA), which largely implements the Solvency II Directive. The distribution of insurance is regulated by the Insurance Distribution Act (2018:1219) (the IDA). The IDA, along with other acts, implements the Insurance Distribution Directive (the IDD). Foreign insurance undertakings conducting insurance business in Sweden are primarily subject to the Foreign Insurance Activities Act (1998:293) (the FIAA).

Insurance contracts and most of the relationship between the insurer and the insured are governed by the Insurance Contracts Act (2005:104) (the ICA). However, the ICA does not apply to reinsurance contracts (see 6.6 Consumer Contracts or Reinsurance Contracts).

The Swedish Financial Supervisory Authority (the SFSA) regulates insurance and reinsurance undertakings as well as insurance intermediaries, with a focus on ensuring the stability of the financial system and safeguarding and improving consumer protection. The SFSA co-operates with the European Insurance and Occupational Pensions Authority (the EIOPA).

The SFSA issues binding regulations and general recommendations. Where regulations are binding, the general recommendations apply on a comply-or-explain basis, requiring regulated entities to comply or explain any deviations. Sanctions available to the SFSA include the issuance of remarks, warnings, orders to take or refrain from taking certain actions, and administrative fines.

In the case of insurance undertakings, the SFSA may:

  • revoke the authorisation to conduct insurance business;
  • restrict, wholly or partially, the right of the insurance undertaking to dispose of its assets in Sweden; and
  • decide how the insurance business is to be conducted.

Insurance Business

Under the IBA, the conduct of insurance business requires authorisation from the SFSA; the conduct of such business without authorisation may result in sanctions from the SFSA (see 2.1 Insurance and Reinsurance Regulatory Bodies and Legislative Guidance).

Insurance business is not statutorily defined under Swedish law, and whether an activity constitutes insurance business must be assessed on a case-by-case basis. However, based on preparatory works, legal literature and case law, the prevailing view is that a business must meet the following cumulative criteria in order to constitute an insurance business:

  • the business must be conducted commercially;
  • the activity must entail a binding commitment by the insurance undertaking to pay financial compensation or to carry out another pre-determined performance, such as repairing damage or defending the insured against a liability claim;
  • the commitment must be contingent upon the occurrence of an uncertain event;
  • the insurance undertaking must make the insurance commitment in return for a premium; and
  • the insurance commitment must be compensatory – ie, it must protect the insured against negative economic effects.

In addition, the public interest in having the authorities supervise and monitor the business must be taken into account when deciding whether a business should be classified as insurance business.

Even if the above criteria are met and the public interest assessment indicates that the activity should be regulated as insurance business, certain activities may still fall outside the scope of insurance business (eg, insurance-like undertakings ancillary to a main undertaking concerning vehicles, travel services or construction).

However, there are caveats to the authorisation requirement to conduct insurance business. For instance, a foreign insurance undertaking within the EEA may generally passport its licence within the EEA under the principle of single state authorisation (see 3.1 Overseas-Based Insurers or Reinsurers).

When an undertaking is authorised to conduct insurance business, it may issue insurance contracts covering any type of customer (consumer, SME or corporate), as Swedish law does not differentiate between categories of customer. However, the authorisation is limited to one or more specific insurance classes within life or non-life insurance, or, in certain specified cases, a combination of insurance classes within both. In addition, an insurance undertaking may only conduct insurance business and operations arising directly therefrom.

Regulations for Insurance Businesses

An insurance undertaking must comply with comprehensive and strict prudential regulation, including solvency and minimum capital requirements tailored to the specific aggregate risk level of the individual insurance undertaking. The prudential regulation also includes a qualitative prudent person principle with which the insurance undertaking must comply – eg, in regard to its investments – as well as various more specific investment regulations relating to, among other things, the location of assets, risk diversification, investments in derivatives and unlisted assets.

In addition, the IBA requires insurance undertakings to comply with several Swedish general standards and principles that do not follow from the Solvency II Directive. However, many of the requirements overlap – eg, to maintain satisfactory financial stability (stabilitetsprincipen), abide by generally accepted insurance business standards (god försäkringsstandard) and provide sufficient information when selling insurance products.

Importantly, an insurance undertaking may only assume debt if it serves to increase the efficiency of the capital management or is otherwise required for the insurance business. The total debt of an insurance undertaking must also be limited in relation to the scale of its business and the size of its capital base. The SFSA may grant exceptions from the debt limit under special circumstances, but such exceptions are rarely granted in practice.

Insurance undertakings are also subject to an array of comprehensive corporate governance and outsourcing requirements, as well as fit and proper requirements for management and individuals responsible for key functions (eg, compliance, internal control and risk management).

Under Swedish tax law, there is generally no taxation of insurance premiums, with the exception of premiums for motor insurance (trafikförsäkring) and group life insurance. Insurance premiums are also exempt from VAT.

Secondary Establishments and Cross-Border Activities

Pursuant to the FIAA, which implements the EU principle of single-state authorisation, an EEA-based insurance undertaking may conduct insurance business in Sweden by way of a secondary establishment or cross-border activities.

Regarding secondary establishments, the EEA insurance undertaking may commence operations in Sweden two months after the SFSA has received the notification from the home state authority. As for cross-border activities, the insurance business may commence as soon as the SFSA receives the notification from the home state authority. Due notification is necessary for EEA insurance undertakings regardless of whether they will actively conduct business in Sweden or merely passively accept business from Swedish insureds.

New rules regarding cross-border conversions, mergers and divisions came into force on 31 January 2023 (see Trends & Developments).

Reverse Solicitation

Under the FIAA, a third-country insurance undertaking may conduct insurance business in Sweden passively by way of so-called reverse solicitation without a licence or notification. However, a third-country insurance undertaking may undertake active measures on the Swedish market only pursuant to specific authorisation from the SFSA through a branch or a general agent (ie, not through cross-border services). Insurance undertakings wishing to establish a branch office in Sweden must appoint a branch manager and register the branch with the Swedish Companies Registration Office (the SCRO) before commencing business.

A general agent, on the other hand, is an individual or legal entity tasked with leading and managing the foreign insurance undertaking’s insurance business in Sweden. The foreign insurance undertaking may be represented by only one general agent, who must be resident or have its registered office in Sweden.

Regardless of whether the third-country insurance undertaking opts for a general agent or a Swedish branch, it must be authorised by the SFSA to conduct insurance business in Sweden. Unless otherwise stated below, the same provisions apply to third-country branches and general agents.

Marketing Licences

Third-country insurance undertakings may also apply for a specific marketing licence, which allows them to market insurance products in Sweden through the intermediation of a licensed insurance undertaking in the country. The third-country insurance undertaking must either be part of the same group as the Swedish licensed insurance undertaking or have entered into a co-operation agreement with the Swedish licensed insurance undertaking for the marketing of the insurance products in the Swedish market.


The Brexit trade and security deal between the EU and the UK came into force on 1 May 2021, but it provides limited clarity for insurance companies. No decision has yet been made on so-called equivalence or the extent to which UK firms will be allowed to continue selling their services into the single market from their UK establishments. As a result, UK insurance undertakings will have to comply with the Swedish provisions on third-country insurance undertakings referred to above.

In June 2023, the Council authorised negotiations between the EU and the UK on co-operation in competition matters. The negotiations are expected to result in an agreement to supplement the existing trade and co-operation agreement.

Fronting is a risk management approach whereby an insurance company underwrites a policy to cover a specific risk, but then cedes the entire risk to a reinsurer. Although fronting has not historically been a widely accepted market practice in Sweden, it now appears to be generally accepted under Swedish law. The fronting insurance undertaking must be directly liable to the insured in order for the arrangement to constitute insurance. If the fronting insurance undertaking does not assume risk, it may be questioned whether the business complies with the Swedish provisions under which insurance undertakings may not conduct other business than insurance business, for example.

Acquisition of Shares

The SFSA’s prior approval is required for the acquisition of shares in an insurance undertaking that would result in a qualified holding. Under the IBA, a qualified holding is direct or indirect ownership of a company if the ownership represents more than 10% of the value of the company or more than 10% of the voting rights of the company, or if it otherwise facilitates a substantial influence over the management of the company. Approval is also required if a qualified holding increases to 20%, 30% or 50% of the shares or the voting rights in the company, or if the insurance undertaking becomes a subsidiary. Approval is granted only if the acquirer is deemed suitable to exercise substantial influence over the management of the company and the acquisition can be considered financially sound.

Insurance undertakings may wholly or partially transfer a portfolio of insurance policies to another Swedish or foreign insurance undertaking authorised to conduct insurance business in Sweden or in another EEA country. Such transfers are subject to procedural rules and approval by the SFSA.

Consolidation of Undertakings

An ongoing trend in insurance M&A is the consolidation of smaller insurance undertakings, mainly through portfolio transfers to major Swedish insurance undertakings. This trend is likely to be driven by the challenges for smaller insurers to cost-effectively navigate the growing regulatory landscape. The benefits of scale appear to give larger insurance undertakings a competitive edge, enabling them to acquire smaller portfolios and integrate them into their existing business.

Current Status of the Sector

During recent years, the Swedish insurance market has seen several significant transactions, including acquisitions, listings, portfolio transfers of insurers and acquisitions of insurance intermediaries. As the M&A market in general has experienced a slowdown, the number of transactions within the insurance sector is likely to decrease. Nonetheless, given the potential synergies and the nature of the insurance market, consolidation of smaller insurance undertakings and intermediaries may continue to be a driver of transactions.


Insurance distribution is mainly regulated by the IDA and regulations issued by the Swedish government and the SFSA. The IDA has a broad scope and applies to those who:

  • give advice on insurance and conduct other preparatory work before the conclusion of insurance contracts;
  • assist in the entering into of insurance contracts; and
  • assist in the administration or performance of an insurance contract.

In some respects, the IDA goes beyond the minimum requirements of the IDD – eg, by imposing stricter regulations on occupational pensions exposed to market fluctuations. Some of the rules for insurance-based investment products also apply to occupational pensions exposed to market fluctuations.

Insurance Distribution

The conduct of insurance distribution requires authorisation. Authorisation may be received either by obtaining an independent licence from the SFSA or by becoming tied to one or more insurance undertakings via a distribution agreement where the insurance undertaking registers the insurance intermediary as such with the SCRO. A tied intermediary may not commence its distribution before such registration.

The distribution agreement must provide that the insurance undertaking will be liable for any pure economic loss for which the tied distributor is liable to customers as a result of the tied distributor's intentional or negligent breach of its obligations under the IDA. The insurance undertaking must also ensure that the management of the tied distributor has sufficient knowledge and experience to conduct insurance distribution.

However, the distribution of insurance-based investment products or occupational pensions exposed to market fluctuations always requires a licence from the SFSA, regardless of whether the insurance intermediary is tied to one or more insurers. Also, a distributor tied to one or several insurance businesses may not distribute competing products issued by another insurance business.

The IDA requires insurance distributors to:

  • conduct their business under generally accepted insurance distribution standards;
  • design their systems of remuneration to avoid conflict with the duty to safeguard customers’ interests; and
  • disclose information regarding the insurance distributors’ business and the distributed insurance product before the customer enters into the insurance contract, among other activities.

Insured's Duty to Disclose Information

The ICA stipulates that the insured must, upon the insurance undertaking’s request, disclose all information that may affect the insurance undertaking's decision to issue the insurance policy, before entering into, renewing or extending an insurance contract. This obligation for the insured continues throughout the insurance period. The insured must answer the insurance undertaking’s questions truthfully.

As for matters that would have an obvious effect on the risk assessment, non-consumer insureds must provide the information even without the insurer’s request, and both consumer and non-consumer insureds must correct any information previously provided if the insured realises that it is incorrect or incomplete. Failure to fulfil the duty to disclose, whether intentional or negligent, may result in a reduction of the insurance compensation. If the insured acts deceitfully in fulfilling this duty, the contract will be void.

Furthermore, under the ICA, a consumer insurance contract may stipulate that the insured must expeditiously disclose any increase in risk. Failure to do so may result in a reduction of the insurance compensation. For commercial insurance contracts, such a duty exists regardless of whether or not it is explicitly stated in the contract.

Insurer's Duty to Provide Information

Before concluding an insurance contract, the insurance undertaking must provide certain information as required by the ICA and the IDA, including information to help the insured assess the need for the insurance product. The information should provide an overview of the insurance coverage and must clearly state notable exclusions.

During the insurance period, the insurance undertaking must provide the terms and conditions of the insurance policy and other circumstances that are important to the insured. If the insurance undertaking fails to emphasise certain terms of a consumer contract (eg, unexpected or material limitations of the insurance coverage), it cannot invoke such terms.

In the case of commercial insurance contracts, the insurance undertaking may omit the information required for consumer contracts if it can be assumed that the insured does not need the information.

See 6.1 Obligations of the Insured and Insurer.

An intermediary may be involved in the negotiation of the insurance contract on behalf of either the insured or the insurer. The intermediary’s obligations would then stem from the IDA (see 5.1 Distribution of Insurance and Reinsurance Products), the contract between the intermediary and the insured/insurer, and general principles of contract law, such as the agent’s duty of loyalty towards its principal.

However, regardless of who they represent, intermediaries always have certain obligations to the customer of insurance products under the IDA, and must adhere to generally accepted insurance distribution standards, which include:

  • taking account of the interests of the customer;
  • only recommending insurance solutions that are appropriate for the customer; and
  • providing the customer with information regarding the distributed insurance product as well as the intermediary’s business and the way in which the intermediary is remunerated.

There is no statutory definition of an insurance contract under Swedish law, and no explicit legal requirements that must be fulfilled in order for a contract to constitute an insurance contract. Guidance may possibly be sought in the widely accepted definition of insurance business (see 2.2 The Writing of Insurance and Reinsurance). However, under general contract law, insurance contracts may in theory be entered into by two parties, neither of which conducts insurance business.

The ICA applies to any contract that is deemed to constitute an insurance contract, and imposes several obligations on both insurer and insured.

For something to be insurable pursuant to the ICA, it must constitute a legal interest. Consequently, it is not possible to insure, for example, the risk of unsuccessful criminal activity.

In addition, the SFSA has recently issued a statement in which it deems that it is not compatible with good insurance standards to provide insurance against fines or administrative sanction fees. According to the SFSA’s statement, this applies to both Swedish insurance companies and foreign insurers operating in Sweden, but does not apply to marine insurance.

Non-insured parties (eg, named beneficiaries in life insurance policies) can still be beneficiaries of an insurance contract under Swedish law.

In addition, under the ICA, a third party with a security interest in real property or a ground lease is essentially entitled to any insurance compensation available under an insurance policy that covers the value of the property in question. Unless the insurance policy states otherwise, a security interest in movable property may also ensure a right to compensation under such an insurance policy.

When there are multiple beneficiaries to an insurance policy, a creditor with a security interest in real property or a ground lease may receive compensation from the insurance undertaking even if the underlying debt is not due for payment. However, if the creditor’s security does not decrease significantly as a consequence of the insured event, the owner of the property may still have first priority over any available insurance compensation, unless agreed otherwise.

The ICA, IDA and IBA impose duties to provide the beneficiaries to an insurance contract with required information before the contract is made and during the contractual relationship.

The contracting parties have greater contractual freedom under commercial insurance contracts compared to consumer insurance contracts. The ICA imposes more onerous obligations on the insurer and more lenient obligations on the insured in consumer contracts than commercial contracts regarding, for example, the insurer’s provision of information, the insured’s disclosure of information regarding the insured risk, exclusions and the effects of breaching contractual or legal obligations.

Reinsurance contracts are governed not by the ICA but by the Contracts Act (1915:218) (the CA). This gives the contracting parties even greater contractual freedom as the mandatory provisions in the ICA do not apply. However, contractual freedom is not unlimited under the CA.

Although rarely applied, the CA allows a court to disregard or modify a contract clause if it finds the clause to be unreasonable in relation to the contract as a whole, to the circumstances at the inception of the contract or to subsequent events. In practice, English reinsurance case law and practice appear to influence the construction and application of reinsurance contracts under Swedish law.

From a Swedish perspective, ART is a collective term encompassing both financial reinsurance and other forms of transfer of risk to the international capital markets, such as industry loss warranties. ART typically serves as an alternative to traditional insurance or reinsurance as a way of transferring risk. Although the Swedish ART market is still at the nascent stage of its development, it appears that ART has developed in areas where the insurance and reinsurance markets have traditionally not responded adequately to customer needs and wishes.

One of the issues with ART is its regulatory treatment and the extent to which it will be effective in terms of meeting an insurance undertaking’s solvency requirements. The Solvency II Regulation, which applies in Sweden, expressly recognises financial reinsurance as a risk-mitigating technique and that it serves to provide regulatory credit, provided that it meets certain criteria set out in the Solvency II Regulation.

ART to other jurisdictions may be treated as reinsurance for Swedish insurance undertakings to the extent that the contract fulfils the Solvency II Regulation requirements for recognition as a risk mitigant.

The Nature of Insurance Contracts

Insurance contracts are primarily governed under specific legislation (the ICA), in addition to the CA, which applies to contracts in general. As with contracts in general, insurance contracts stipulate the parties’ obligations. The insured’s main obligation is the timely payment of a premium, while the insurer’s main obligationis to bear the risk of the occurrence of an unwanted and uncertain event. If the risk materialises, the insurer must pay insurance compensation to the insured. For insurance contracts, the factor of uncertainty is key, as to if, when or to what degree the insured event will occur.

Whereas contractual freedom is the main rule in general contract law, this is not always the case for insurance contracts. For instance, some types of insurance are compulsory (eg, motor insurance), and the ICA imposes an obligation to contract (kontraheringsplikt) on the insurer for certain consumer insurances.

Against this backdrop, insurance contracts arguably have special features compared to other contracts.

Method of Interpretation

There is no statutory guidance on the construction of contracts but the method for construing contracts under Swedish law is well established in case law. Insurance contracts are essentially interpreted in the same way as other contracts, and the ultimate source for determining the content of an insurance contract is the common intention of the parties at the time the contract is concluded. However, because insurance contracts are often based on non-negotiable standard forms, the common intention of the parties is often impossible to ascertain in practice. Instead, the typical starting point for construing an insurance contract is its language.

The objective meaning of the insurance contract should, in turn, be understood via the normal meaning of the wording itself. The following aspects, amongst others, may be taken into consideration:

  • the systematics of the contract;
  • the purpose of the contract as a whole and the specific clause(s) under scrutiny; and
  • non-mandatory law or professional practice.

The interpretation of the contract should also give a fair and reasonable result. If an assessment of these factors fails to yield a result, a general principle of contract construction may be used – eg, the in dubio contra proferentem rule (oklarhetsregeln), meaning that an ambiguous clause should be construed against the person who drafted it. However, in a recent judgment the Supreme Court stated that there is normally no need to address the question of whether the insurance company could have worded a disputed term in a clearer way when sufficient guidance for the interpretation can be derived from other factors.

Since Swedish procedural law allows for the free sifting of evidence, extraneous evidence is admissible for the construction when there is a dispute over the meaning of an insurance contract. Therefore, external circumstances (eg, prior negotiations or written communication relating to the agreement) may be used by the court when determining the meaning of the contract.

Warranties are set out in insurance contracts as a way for the insurer to make its promise of cover conditional, limiting its risk or burden. As the basis for the promise to assume risk relies on complex calculations, it may indeed be necessary to condition the cover to some extent. This serves to make the insurer’s actuarial assessments more accurate and to enable it to charge the correct premium for each specific risk.

While Swedish insurance contracts typically do not feature true warranties, they may contain other important standard conditions. For instance, insurance contracts often include specific standards (eg, locking the doors of business premises or having satisfactory alarm systems) to which the insured must adhere in order for the insurer to remain fully liable for the insured risk. This type of condition (säkerhetsföreskrifter) is regulated under the ICA.

The insurance contract may stipulate that the insurer is free from liability if the insured fails to comply with these standards, to the degree such damage would be limited by the insured following the standards. If the insurer fails to emphasise these conditions to the insured, they cannot be enforced. In some insurance contracts, there is a cap on the amount by which failure to adhere to the stipulated standards may reduce the insured’s liability.

Conditions precedent do not have a distinct definition in Swedish insurance contract law. However, there are provisions in the ICA that allow the insurer to reject a claim regardless of whether the insurer has suffered any prejudice. For instance, most insurance contracts impose an obligation on the insured to disclose certain information (see 6.1 Obligations of the Insured and Insurer). If the insured has been fraudulent or deceitful in providing such information, or has failed to provide such relevant information to the insurer, the contract will normally be considered void.

Dispute Resolution

Coverage disputes under non-commercial insurance policies are usually addressed in the general court system, whereas disputes over coverage under commercial insurance contracts are often arbitrated. In Sweden, arbitration is the preferred route for reinsurance disputes, which are relatively rare.

The Swedish general courts recognise two types of private law legal actions:

  • claims for specific performance; and
  • claims for declaratory judgment.

In other words, an insured may seek a judgment by which the insurer is obliged to pay a certain sum under an insurance contract, or a judgment solely declaring an insurer liable to pay insurance compensation in an unspecified amount.

Disputes between consumers and insurers may be submitted to the National Board for Consumer Disputes (Allmänna reklamationsnämnden) (ARN), which operates similarly to a traditional court but is a public authority that only issues non-binding recommendations on how disputes should be resolved. From experience, insurers often comply with ARN’s recommendations.

Preclusion and Time Limits

Under the ICA, an insurance claim is time-barred if the insured has not taken legal action against the insurer within ten years of the event giving the right to insurance compensation. However, provided that the insured has reported an insurance claim within this period, the insured will always have six months to bring legal action against the insurer after the insurer formally denies insurance compensation. For example, if the insurer declines to pay insurance compensation nine years and 11 months after the event that gave rise to the insured’s right to insurance compensation, the insured will have six months to take legal action against the insurer (rather than only one month).

In commercial insurance contracts, the insurance contract may stipulate that the insured will forfeit its claim if it is not reported within a certain time limit. However, that limit may not be less than one year from the date of the circumstances giving rise to insurance compensation. Furthermore, the insurer may demand in writing that legal action be taken within a specified period (not shorter than one year), to bring the insurance claim to an end.

Third-Party Rights

The general rule under Swedish contract law is that an agreement is binding only between the parties to the agreement (ie, it confers rights and obligations on these parties only). As this main rule also applies to insurance contracts, the ICA stipulates no general right for a third party to claim insurance compensation from the insurer under an insurance policy. However, there are a few exceptions to the main rule – eg, for creditors with a security interest in the insured property (see 6.5 Multiple Insured or Potential Beneficiaries).

The ICA also provides that if the insured is required by law to have liability insurance (which is the case for insurance intermediaries, lawyers and estate agents, for example), a third party to whom the insured is liable may claim compensation directly from the insurer. Similarly, motor vehicle insurance is required by law and allows a third party to make a claim directly against the insurer.

Furthermore, under the ICA, a third party also has direct access to the liability insurance if:

  • the insured has been declared bankrupt or an order has been issued for public composition; or
  • the insured is a legal entity that has been dissolved.

If the third party to whom the insured is liable (ie, the injured party) has received insurance compensation for the damage from its insurer, the insurance company assumes the injured party’s right to have direct access to the insured’s liability insurance. In this situation, an insurance company (ie, the injured party’s insurer) may therefore be entitled to have direct access to the liability insurance held by the insured with another insurance company. According to the Recourse Agreement (Regressöverenskommelsen) made between several Swedish insurance companies, the property insurance company taking recourse must initiate legal proceedings against the liability insurance company within two years of receiving the first notification of the loss or damage on which the recourse claim is based. This limitation period is different from that which normally applies to ordinary insurance claims.

In a recent judgment, the Supreme Court held that an earlier judgment between a tortfeasor and its liability insurer, in which the tortfeasor’s claim for insurance compensation was dismissed, did not prevent, by virtue of the rules on res judicata, an action brought by a third party against the tortfeasor’s liability insurer under the above-mentioned rules on direct access to the liability insurance. In this case, the claimant was the property insurer of the injured party, which had assumed the right of the injured party after paying insurance compensation to the injured party. The Supreme Court held that the property insurer could make a direct claim against the tortfeasor’s liability insurer.

If a dispute falls under the Brussels/Lugano Regime, Swedish courts will resolve jurisdiction disputes under those rules. Specific Swedish statutes, such as the FIAA, also require foreign insurance undertakings conducting insurance business in Sweden to follow Swedish law and answer before Swedish courts.

If the dispute does not fall under any EU regulation or a convention to which Sweden is a party, and if no other statute on jurisdiction applies to the specific case, disputes on jurisdiction will be resolved by analogous application of the Swedish statutes on jurisdiction. In general, for a Swedish court to have jurisdiction, the dispute must have a connection to Sweden, and the Swedish judicial system must have an interest in resolving the dispute.

The Rome I Regulation restricts the choice of law for insurance contracts covering risks in Sweden. The main rule is that Swedish law governs the insurance contract, although the regulation includes notable exceptions to this main rule. Furthermore, parties to an insurance contract covering a large risk – as defined under the Solvency II regime – generally have full autonomy as to the choice of law.


Litigation in Sweden is initiated by submitting an application for a writ of summons to the relevant district court. If the claimant is represented by a member of the Swedish Bar (advokat), the ethical guidelines of the Swedish Bar Association (Sveriges advokatsamfund) typically require the legal representative to send a letter of demand to the opposing party before submitting the application for a writ of summons to the district court (or requesting arbitration under an arbitration clause). The application for a writ of summons should contain:

  • a precise claim;
  • a detailed description of the circumstances that are invoked in support of the claim;
  • information about the evidence invoked;
  • information on what the evidence is invoked to prove; and
  • information regarding the circumstances that render the court competent to hear the dispute.

If the application fulfils these requirements and is not obviously unfounded, the district court will issue a writ of summons and serve it on the respondent, after which preparatory proceedings will be initiated and the respondent will be ordered to submit a reply.

Preparatory Proceedings

The preparatory proceedings are intended to clarify the following:

  • the parties’ claims and the circumstances invoked in support thereof;
  • invoked evidence;
  • whether further investigation or other measures are necessary before the conclusion of the case; and
  • whether it is possible for the parties to find an amicable solution to the dispute.

The preparatory proceedings usually include several exchanges of written submissions and an oral preparatory hearing.

After the preparatory proceedings have been closed, a party can typically introduce new circumstances or evidence only if it has a valid excuse for not doing so earlier, or if doing so will not substantially delay the proceedings.

Oral Hearings and Judgments

As a last step in the proceedings before the judgment, a main oral hearing is normally held, in which the parties present their cases, including written evidence, and any witnesses are heard.

Swedish hearings are characterised by certain main features.

  • Firstly, all evidence invoked by the parties must, as a general rule, be presented orally. During the hearing, the parties are only allowed to submit or read from written submissions or sources if doing so is deemed suitable by the court for clarity or if it is otherwise favourable for the proceedings.
  • Secondly, the court is only allowed to base its judgment on the evidence presented during the main oral hearing.
  • Thirdly, the main oral hearing should be held without any interruption, to the extent possible.

District court judgments can be appealed to a Court of Appeal, whose judgments may, in turn, be appealed to the Swedish Supreme Court. Leave to appeal is required in both of these instances.

Judgments by Swedish courts are automatically enforceable in Sweden. As a general rule, foreign judgments may only be enforced if they fall within the scope of an EU regulation or a convention to which Sweden is party, in which case an application may be lodged with a district court to make the judgment enforceable in Sweden.

Judgments under the Brussels Regime are automatically enforceable in Sweden if the court proceedings were initiated on or after 10 January 2015. If the court proceedings were initiated before then, an application must be lodged with a district court to make the foreign judgment enforceable in Sweden.

Arbitration clauses in commercial insurance and reinsurance contracts are enforceable in Sweden. There is precedent that suggests that an arbitration clause may be ignored if enforcement of the arbitration clause would lead to unreasonable results due to the balance of power between the parties. However, if even possible, invalidating an arbitration clause would likely be out of the question unless the balance of powers between the parties is so uneven that it resembles an actual consumer contract rather than a commercial contract.

Arbitration clauses in consumer contracts are not enforceable, except in a few special circumstances – eg, if the contract is a group insurance contract and a group representative has represented the insureds.

Sweden is party to the New York Convention, so arbitral awards rendered in foreign jurisdictions are generally enforceable in Sweden in the same manner as a judgment from a Swedish court, subject to the New York Convention and the Swedish Arbitration Act (1999:116). To enforce an arbitration award from a foreign jurisdiction in Sweden, an application must be lodged with the Svea Court of Appeal.

It is common for parties to an insurance dispute to settle their differences in good faith. The Swedish courts have a duty to actively work towards finding an amicable solution between parties to a dispute, if possible and appropriate. If the parties agree, the courts may also initiate mediation between them. Mediation is also available through the Stockholm Chamber of Commerce, and there is generally nothing preventing the parties from agreeing on and independently appointing a mediator on an ad hoc basis. However, practical experience suggests that meditation between parties in an insurance dispute is rather rare.

The ICA requires insurers to handle insurance claims expeditiously. The main rule is that the payment of claims should be made at the latest one month after the insured has reported the claim and presented the evidence that may reasonably be required to determine the insurer’s liability to pay insurance compensation. If it is obvious that the insured is entitled to at least a certain sum, the insurer must pay that sum immediately. Commercial insurance contracts may allow the insurer and the insured to agree on terms deviating from the ICA’s obligations regarding late claim payments.

The insured is entitled to interest on the insurance compensation if the insurer is late with its payment. Under general contract law, the insurer may also become liable to pay damages for losses that the insured incurs due to the insurer’s late payment.

Insurers must adhere to generally accepted insurance standards under the IBA. Improper delay in settling claims may amount to a breach of said standards and could result in sanctions by the SFSA, at least in flagrant cases.

The ICA includes a statutory right of subrogation for insurers – ie, they are entitled to pursue recoveries for loss actually incurred by the insured and indemnified by the insurer under the relevant insurance policy. The insurer assumes the insured’s claim for damages against the third party, if any, that has caused the insured’s loss (or against another insurer). See 9.1 Insurance Disputes Over Coverage (Third-Party Rights).

However, the insurer will not assume a better position than the insured against the third party. Thus, the insurer will not be able to claim compensation that exceeds the liability of the third party to the insured. With life insurance, the insurer is not able to pursue its rights of recovery for insurance of fixed sums.

Generally, the insurance policy may limit the insurer’s right of subrogation, which may also be limited due to the Recourse Agreement (Regressöverenskommelsen), or due to any contracts under which the insured has waived any future rights of recovery.

The area of insurtech has seen a steady rise in recent years, although 2022 and 2023 saw global investments in insurtech decrease somewhat. Sweden is known for its advanced digital economy, and appears to be well positioned for innovative solutions within insurtech. Insurtech companies have made established insurance companies aware of shortcomings in digitalisation, which seems to have led the latter to increase digitalisation efforts and collaborations with insurtech companies.

In some areas of the insurance sector, smaller insurers are being consolidated into larger ones, but insurtech start-ups in Sweden seem to embrace the challenges of a well-regulated and supervised market. Some such entities appear to profile themselves with, and heavily rely on, the use of artificial intelligence (AI) to reduce costs and improve the customer experience. In addition, several insurtech companies have emerged within insurance distribution during recent years.

As a response to insurtech issues, the Swedish government has tasked the SFSA with mapping innovations and market needs. To facilitate fintech innovations, the SFSA has established an innovation centre, which serves to provide more dialogue with insurtech companies, for example.

Cyber-risk evolves with technological advancements and poses challenges for businesses, including insurers. Since Russia's invasion of Ukraine in February 2022, the risk of cyber-attacks appears to have only increased.

On 6 May 2022, the SFSA proposed measures to increase resilience to cyber-attacks. The SFSA proposed to, for example, strengthen its cyber-related supervision, to establish a cybersecurity council within the Prime Minister’s Office, and to subject bank ID and other private e-identification to appropriate oversight.

Furthermore, the apparently more frequent occurrence of extreme weather entails new risks, which may be expected to affect primarily property insurers. One example is the extreme flooding in Sweden in 2021, which resulted in several thousand insurance claims (see Trends & Developments).

There is also an emerging risk relating to the increase of large and complex legislative acts in the insurance sector. For insurers, especially SMEs, this results in higher operational costs as more resources will be required to undertake all measures necessary for compliance.

On 22 September 2022, the General Board of the European Systemic Risk Board (ESRB) issued a warning on vulnerabilities in the financial system of the EU. The ESRB concluded, for example, that an increase in energy prices and higher inflation than expected have caused an increase in risks to financial stability and the probability of tail-risk scenarios materialising. In November 2023, ESRB chair Christine Lagarde stated that some risks have materialised since the general warning. The ESRB maintains the view that all relevant institutions need to take action to prevent the previously mentioned risks from materialising.

To keep pace with emerging risks, insurers continuously develop new insurance products.

Implementation of Recent EU Directives

The Swedish insurance market has undergone several important legal changes recently, primarily influenced by EU law. Notably, the implementation of the EU directive on the activities and supervision of institutions for occupational retirement provision (IORP II) was enacted in December 2019 through the Occupational Pension Companies Act (2019:742) (the OPCA). Until the end of 2022, Swedish life insurance companies offering occupational pension insurance were able to choose to either comply with the IBA in its entirety or to restructure the company to become an occupational pension company governed by the OPCA.

With the introduction of IORP II, debates in the Swedish parliament have revolved around allowing pension scheme members to move their funds to other insurers. As a consequence of the impact of COVID-19, the Swedish Finance Ministry issued a government bill that proposed granting a special solvency leeway to occupational pension funds in their IORP II applications to convert to the special status of occupational pension companies. The new legislation entered into force on 15 December 2020.

In addition, Sweden has implemented EU Directive 2019/2121 amending EU Directive 2017/1132 regarding cross-border conversions, mergers and divisions. The new provisions are discussed in the Trends & Developments section.

Review of the Solvency II Directive

The European Commission adopted a comprehensive review of the Solvency II Directive on 22 September 2021, based on the EIOPA’s technical advice from 17 December 2020. The review resulted in a legislative proposal to amend the Solvency II Directive.

The overall aim is to ensure that insurers and reinsurers in the EU keep investing and supporting the political priorities of the EU, in particular:

  • financing the post-COVID-19 recovery;
  • completing the capital markets union; and
  • channelling funds to implement the European Green Deal.

The European Commission’s proposal included adding a new article to the Solvency II Directive, which would require insurers and reinsurers to identify any material exposure to climate change risks during their own risk and solvency assessments within their risk management. They must also assess the impact of long-term climate change scenarios on their business, if applicable.

Furthermore, 2022 saw amendments to the Solvency II Regulation, pursuant to which sustainability risks have been integrated into the governance of insurance and reinsurance undertakings. For instance, insurance and reinsurance undertakings will have to take sustainability risks into account when they identify, measure and assess risks arising from investments. The EIOPA has recently decided on changes to the rules on Solvency II reporting, which became effective on 31 December 2023.

Financial Data Access

The European Commission has proposed a Financial Data Access framework (FIDA), launching the “Open Finance” initiative. In short, the proposal requires financial actors to provide access to data on request when acting as data holders, and to allow the sharing of data, with the consent of a customer, to a data user. The proposal affects a wide range of financial firms, including insurance companies, reinsurance companies, insurance intermediaries and occupational pension institutions.

The aim of FIDA is to promote innovative insurance products and to stimulate competition.

Banking and Outsourcing

In relation to outsourcing, it is worth mentioning the advice from the EIOPA, published in February 2020.


The COVID-19 pandemic deeply affected the global economy, including Sweden, and society has now begun to experience post-pandemic effects. Changes in consumer demand are already evident in the insurance market – for instance, with more people working remotely, a demand for new types of occupational insurance may be expected.

As for COVID-19-related disputes, some cases have been adjudicated in lower courts, and one case has recently been adjudicated in the Supreme Court. In that case (No T 3101-22), the insured (a nightclub and restaurant business) claimed insurance compensation under an epidemic business interruption insurance policy. The question in this case was whether such a policy covers loss incurred as a consequence of public authorities’ decisions in response to COVID-19. The insured had seen its business limited by the generally applicable decisions of the Public Health Authority to limit the number of people allowed on the insured’s premises. However, the applicable terms and conditions stipulated that a loss had to be the result of an “authority’s intervention” in order to be covered, and the Supreme Court found that this term referred to interventions against individual companies, not generally applicable decisions. Thus, the insured was not awarded insurance compensation.

Sustainability-Related Issues

Recent years have seen a noteworthy shift in the insurance sector, with a growing emphasis on ethical considerations in investments, especially relating to sustainability. As part of the EU’s climate goals and the objectives of the green growth strategy (the Green Deal), the EU has introduced its taxonomy for sustainable investments, constituting a system for the classification of sustainable businesses. The EU Corporate Sustainability Reporting Directive sets new standards for reporting corporate sustainability, and Sweden is expected to implement the Directive gradually from 1 January 2024.

Cloud Services

Cloud service contracts are often standardised and may not fully align with the strict requirements of outsourcing arrangements. To this end, the EIOPA has issued guidelines for market participants on outsourcing to cloud service providers, which have applied in Sweden since 1 January 2021.


As a sector heavily influenced by data, AI is set to impact the insurance industry in various ways. Many Swedish insurance companies have implemented AI solutions into their business – eg, within customer support and for risk management and underwriting processes. The growing use of AI in the insurance industry comes with both opportunities and challenges. While AI solutions may impose security risks, they may also improve insurers’ defence solutions. AI is currently unregulated, but the EU is actively working towards the adaption of the proposed AI act.

Mannheimer Swartling Advokatbyrå AB

Norrlandsgatan 21
Box 1711
SE-111 87

+46 8 595 060 00

+46 8 595 060 01
Author Business Card

Trends and Developments


Mannheimer Swartling Advokatbyrå AB is one of the leading business law firms in Sweden and advises clients around the world. The firm has offices in Sweden, Belgium, Singapore and the USA, and strives to provide the most high-quality advice in the market, whether a client is an entrepreneurial start-up or a global listed company employing thousands of people. The insurance practice group consists of four partners, one senior adviser and nine associates, and is highly experienced in advising on significant strategic projects as well as day-to-day operations, covering virtually all aspects of the insurance and reinsurance industries. Regular mandates include restructurings, domestic and cross-border distribution, insurance claims and disputes, product development, reinsurance arrangements and regulatory issues, including regulated cross-border transactions such as M&A and portfolio transfers. Clients include insureds, life and non-life insurance undertakings, reinsurers, intermediaries (brokers and agents) and other market professionals.

Flooding and the Insurance Industry


Climate change is widely considered to be causing rising average temperatures and more extreme weather in many places around the world. According to the United Nations, nature-related damage has also increased, leading to more insurance claims and higher insurance payouts. According to the Swiss Re Institute, insured losses caused by nature-related damage amounted to USD50 billion worldwide in the first half of 2023, representing the second highest figure since 2011 and a 42% increase of the average figure for the last decade. According to the same institute, the insured losses for nature-related damage have increased by an average of 5% to 7% per year over the last decade. On a global scale, significant nature-related perils include droughts, heatwaves and floods, with floods being the most relevant and immediate risk from a Swedish perspective.

Against this background, this article first highlights some of the ways in which flooding appears to be affecting the Swedish insurance industry, and discusses the potential impact that the issue of flooding may have on the industry in the future. The article then addresses the related issue, often debated in Sweden, of which party or parties should be primarily responsible for promoting adaptation to climate change and bearing the costs of nature-related damage – an issue that is highly relevant to insurers.

Flooding in Sweden and the potential impact on the insurance industry

According to the Swedish Environmental Protection Agency (Naturskyddsverket), Sweden has been increasingly affected by floods since the 1980s. This is mainly due to high water levels in watercourses and an increase in annual rainfall.

Developments in recent years have sparked a debate on how to address current and future challenges related to nature-related damage, and climate change issues are high up on the agenda for many industry players. For instance, one of the current focus areas of the Swedish Insurance Legal Association (Försäkringsjuridiska föreningen) is nature-related risks and damage.

The ongoing discussion about nature-related risks has intensified in the wake of the massive flooding in the city of Gävle (population approximately 100,000 inhabitants) in August 2021, when 101 millimetres of rain fell in two hours (by comparison, “normal” rainfall between 4 and 20 millimetres). The Swedish insurance industry organisation, Swedish Insurance Federation (Svensk Försäkring), reported that more than 8,000 insurance claims were made, that almost SEK1.9 billion was paid out in insurance compensation.

Following the flooding in Gävle, the insurance companies involved filed a claim for SEK1.2 billion against the municipality’s water and sewerage company. While the municipality argued that the rainfall in August 2021 far exceeded what should be considered normal, the insurers claimed that the municipality should have taken more preventative and precautionary measures to prevent or at least mitigate the extensive effects of the flooding, despite the abnormal amount of rainfall. The dispute remains unresolved.

A few years ago, the Swedish Insurance Federation stated that no other country’s insurers offered insurance coverage for natural disaster damage that was as generous as that offered in Sweden. This may change in the face of ongoing climate change – and the damage it causes. In other European countries, such as Ireland, the UK and Denmark, homeowners in flood-prone areas are sometimes already being denied the possibility to procure comprehensive home insurance coverage, according to reports in the Irish, British and Danish media, because of the high risk such coverage would entail for insurers. It cannot be ruled out that Swedish insurers will take similar action, especially if flood-related losses become an even greater problem. Although it is difficult to predict at this stage, such a development could lead to higher insurance premiums for homeowners in flood-prone areas, and could perhaps create a demand for tailor-made insurance products and insurers specialising in nature-related risks.

Who should be responsible for climate change adaptation?

How the responsibility for preventing nature-related damage and promoting climate change adaptation should be shared is a closely related question, with political, legal and perhaps moral dimensions. In Sweden, it has long been established that the property owner, and by extension its insurer, bears the primary risk of damage to or destruction of its property. As a result of climate change, it is not impossible that this paradigm will be somewhat questioned and challenged, as certain groups of property owners will be particularly exposed to nature-related risks that, it could be argued, may to some extent be the result of action (or inaction) by the public sector.

In 2018, the Swedish government launched a national climate change adaptation strategy, with the aim of making Swedish municipalities better prepared for the effects of climate change. One of the elements of the national strategy was an amendment to the Planning and Construction Act. Municipalities became required to set out their views on the risk of damage to the built environment from flooding, landslides and erosion, and to address how such nature-related risks could be reduced or eliminated. Although it is impossible to be certain, it does not seem far-fetched that the public sector will have to take more responsibility for the effects of climate change in the future, given the huge costs that such effects could entail. Despite the requirements described above, European architecture and engineering consultancy company Sweco recently concluded that Sweden's capital, Stockholm, along with 25 other European cities, does not have the critical infrastructure needed to deal with heavy rainfall.

Despite the initiatives taken and the broad focus on nature-related risks, it could be argued that there are still shortcomings and unresolved issues from an insurance perspective. It seems there are no proposals on how to deal with a scenario where some areas become so flood-prone that insurers are unwilling to provide full home insurance coverage to homeowners in such areas, potentially exposing certain property owners to unbearable risks. The Swedish Insurance Federation has criticised the government for not giving enough priority to the issue, in the face of budget cuts for climate change adaptation and the work of the Swedish Civil Contingencies Agency (Myndigheten för samhällsskydd och beredskap).


Climate change affects many aspects of society, including the Swedish insurance industry. The number of insured losses caused by nature-related damage, such as flooding, has increased, which has fuelled a debate about what preventative and precautionary measures should be taken.

In the future, more insurers may decide to make claims against municipalities, on the grounds that they should have taken more measures to prevent nature-related damage, thus forcing the public sector to assume more financial responsibility in this respect.

More generally, it is not unlikely that an increased risk of nature-related damage will lead to insurers charging higher premiums for property insurance coverage – or even excluding certain geographical areas from the scope of property insurance coverage or denying property owners living in such areas the possibility of taking out comprehensive home insurance coverage in the first place.

In such a scenario, new insurance products are likely to be introduced, and new insurers specialising in natural catastrophe insurance may even emerge.

As the issue of nature-related risks is highly relevant, there is clearly a need for continued discussion – from different perspectives – on who should be responsible for taking preventative and precautionary measures to mitigate the effects of nature-related damage. It is likely that the insurance sector will continue to play a key role in such discussions, not only in Sweden.



In light of the turbulent global security situation, particularly the war in Ukraine, cybersecurity has become an increasingly important and urgent issue for both public and private actors, not only in Sweden.

As a highly digitalised country, it could be argued that Sweden is particularly exposed to cyberthreats. The digital transition has been underway for years, and has accelerated during and after the COVID-19 pandemic. Today, both the public and private sectors in Sweden rely heavily on digital infrastructure. Although Sweden is a pioneering country in terms of digitalisation, the level of cybersecurity in Sweden is still low compared to European and Nordic standards, according to the “Cybersecurity Index 2023”, a report published by the cybersecurity services company Nixu Corporation. At the same time, cybercrime and data breaches pose a major threat to Swedish companies and unfortunately appear to be on the rise, according to RISE’s Centre for Cyber Security.

This article addresses some of the challenges that cybersecurity and the rise of cybercrime pose to policyholders and insurers. It also highlights some cyber-insurance trends and provides general predictions for the cyber-insurance sector.

Demand for cyber-insurance appears to be on the rise

Cybersecurity has received a lot of media coverage and attention following several recent major cyber-attacks; this trend is also reflected in the Swedish insurance industry’s increased focus on cyber-insurance. Swedish insurance companies and the Swedish Insurance Brokers Association (Svenska Försäkringsförmedlares Förening – SFM) have reported an increase in demand for cyber-insurance solutions in 2023, in the SFM's report on cyber-risks, insurance and insurance brokerage.

However, despite the growing risks, the SFM report states that many companies do not purchase cyber-insurance at all, or opt for inadequate cyber-insurance cover due to high costs and difficulties in understanding the insurance cover. The report also states that many companies are uninsurable because they do not meet the level of protection against cyberthreats required by insurers. There are also other indications from the business community that the complex nature of cyberthreats and of the insurance cover appears to be having a negative impact on the propensity to purchase cyber-insurance.

Cyber-insurance differs from other types of insurance

Cyber-insurance (and the risks it seeks to cover) differs from other types of insurance in many ways, making it a particularly complex product. For instance, because cyberthreats are still a relatively new phenomenon, there is limited loss history upon which insurers can base their risk and premium calculations.

Also, as cyberthreats and cybercrime seem to constantly emerge in new forms and target new parts of the digital infrastructure, it can be difficult for insurers to identify and predict the risks that their insurance products should be designed to cover. A closely related issue is that it can also be challenging to estimate the potential losses from a cyber-attack and the number of parties affected. The characteristics of cyber-risks seem to create a need for innovative insurance products that are subject to constant evaluation and development.

Currently, the majority of Swedish insurance companies offer cyber-insurance both as a separate product and as part of combined commercial insurance policies, with a varying scope of coverage depending on the size of the policyholder’s business and the industry in which the policyholder operates. Common elements typically included in cyber-insurance policies are business interruption, recovery of software and hardware, and third-party liability.

Some insurance companies also offer their customers preventative measures, as well as public relations and negotiation services in the event of a ransomware attack. Many are also insuring administrative fines that could result from cyber-attacks, such as GDPR penalties. However, it remains to be seen whether the SFSA’s recent statement – see the Sweden Law & Practice chapter in this guide (6.4 Legal Requirements and Distinguishing Features of an Insurance Contract) – will have an impact on insurers’ propensity to offer insurance coverage for administrative fines in the future.

Higher cyber-insurance premiums could lead to insufficient insurance coverage

According to a 2022 report by the Stockholm Chamber of Commerce on cybercrime against Swedish companies, cyber-insurance premiums have increased significantly in recent years, due to a combination of increased loss frequency, a low average level of IT security, difficulties in finding a sustainable risk assessment, and difficulties in estimating the total cost of an attack.

While high premiums for cyber-insurance may improve the financial results of insurance companies, there is also a risk, as noted above, that they may reduce the willingness of companies to purchase such insurance coverage. A related global concern is whether the insurance sector is willing or able to provide insurance coverage for major cyber-risks.

As the potential costs of cyber-attacks are difficult to estimate and may in some cases exceed what insurers are willing to cover, there is a risk that some actors may be denied the opportunity to purchase sufficient cyber-insurance coverage, and that certain risks may be excluded from cyber-insurance coverage in practice. Companies and sectors that are highly digitalised are likely to be at greater risk of not being able to obtain sufficient cyber-insurance coverage at a reasonable price, or at all.

The cyber-insurance sector can drive important progress

As well as providing crucial protection for businesses, the insurance sector can also play a role in identifying and preventing threats. This applies not only to insurance companies, but also to other players in the insurance market. For instance, the above-mentioned report from SFM highlights the importance of cyber-insurance and the role that insurance intermediaries can play in contributing to the development of products in this area and in identifying risks and potential gaps where there is no adequate insurance coverage is available in the market. In addition, there appears to be a relatively widespread view within the insurance and business sectors that there is a lack of, and need for, cybersecurity expertise within insurance companies and insurance intermediaries.


Recent years have seen a slight increase in the establishment of insurance companies and intermediaries specialising in cyber-insurance in the Swedish market. As cybersecurity seems to be increasingly important, the demand for cyber-insurance products is likely to continue to grow. The complexity of cyber-risks calls for innovative insurance solutions and raises questions about the extent to which insurance cover can be provided for large cyber-risks, and whether the insurance market will be able to adapt quickly enough to the ever-changing cyberthreats facing businesses in Sweden and around the world.

Cross-border Conversion Directive – New Rules on Cross-border Mobility Within the EEA


New rules on cross-border mobility within the EEA came into force in Sweden on 31 January 2023, implementing EU Directive 2019/2121 amending EU Directive 2017/1132 regarding cross-border conversions, mergers and divisions (the Amending Directive) and giving companies more opportunities for cross-border restructuring within the EEA. In summary, the new legislation develops the procedures for cross-border mergers and introduces the possibilities for cross-border conversions and cross-border divisions. The overall aim is to strengthen the internal market and the freedom of establishment.

Terminology and restructuring options

According to the rules, a cross-border conversion refers to the process through which a company changes its nationality, including the transfer of its registered office. After the conversion, the company is subject to the law of its new home jurisdiction.

A cross-border merger is a legal operation whereby two or more companies of different nationalities are brought together by the acquisition of the assets and liabilities of one or more of them by another company, which assumes the position of the transferring company or companies. After a cross-border merger, only the acquiring company remains as a legal entity; the transferring company or companies are usually dissolved.

In a cross-border division, a company is divided into one or more newly formed legal entities, by transferring the assets of the original company to the newly established company or companies. For the Swedish rules to apply, the acquiring company (or companies) must be a legal person resident in the EEA, and at least one of the acquiring companies must be resident outside Sweden.

The Amending Directive applies to insurance companies

Large parts of the Amending Directive apply to all types of financial companies, including those in the insurance sector. Swedish law recognises three types of legal entities for insurance companies, all of which are subject to specific legislation:

  • insurance companies limited by shares;
  • mutual insurance companies; and
  • insurance associations.

The new regulation allows cross-border mergers for all types of legal entities, but only insurance companies limited by shares may undergo cross-border conversions and cross-border divisions. Therefore, the following text focuses on the regulation of insurance companies limited by shares.

Eligibility requirements

A foreign insurance company may participate in a cross-border merger as the acquiring company if it is authorised to conduct insurance business in its home jurisdiction. In addition, only companies of corresponding legal forms may participate in a cross-border merger.

In the event of a cross-border division, the legal form of the newly formed legal entity or entities should correspond to the legal form of the original Swedish company. Likewise, a Swedish company may only be converted cross-border to a corresponding legal form.

Furthermore, an insurance company may not participate in a cross-border procedure under Swedish law if it is insolvent or subject to company restructuring or compulsory liquidation.

Procedure for cross-border mergers, divisions and conversions

In brief, the procedure for a cross-border merger under Swedish law requires the joint drafting of a merger plan, which must be approved by the companies and reviewed by at least one auditor. Following approval by the companies, the Swedish company or companies involved must apply to the SFSA for authorisation to implement the merger plan. In the case of a merger by combination, if the acquiring company is to have its registered office in Sweden, it must also apply to the SFSA for approval of its articles of association.

The merger and the terms of the merger must be registered with the Swedish Companies Registration Office. Subject to certain conditions, shareholders who have voted against the approval of the merger plan are entitled to have their shares redeemed at an amount specified in the merger plan. In certain cases, however, there is the possibility of a simplified merger procedure.

The SFSA may reject the application on the basis of certain statutory provisions – eg, if it is justified on public interest grounds. As part of the approval process, the SFSA will also assess whether the policyholders and other creditors are provided with sufficient security in relation to the proposed merger and whether the merger is being carried out for an unauthorised purpose.

The Swedish rules for cross-border divisions and cross-border conversions are essentially the same as those for cross-border mergers. From a supervisory point of view, the SFSA verifies that an insurance company does not transfer activities subject to authorisation to an unsuitable company by means of a cross-border division. An acquiring company or a foreign insurance company that is to conduct insurance business in Sweden following a cross-border conversion or division may only be registered if it has been authorised to conduct such business by the SFSA or by a court.


The new rules give financial companies extended possibilities to change their structure and relocate within the EEA. The overall impression is that the Swedish implementation of the Amending Directive seems to be in line with the aim of the regulation – ie, to strengthen the internal market and the freedom of establishment.

In addition, the process of a cross-border conversion appears to be simplified as it does not require or presuppose any transfer of, for example, assets or personnel. Furthermore, the administrative burden is likely to be reduced, as the company remains the same legal entity in the case of a cross-border conversion.

As the regulation is still quite new, it may be premature to draw conclusions about what actual impact it has had or will have on insurance companies and the Swedish insurance industry. As the conduct of insurance business is nationally regulated, with relatively large differences between the different EEA jurisdictions, it seems likely that simplified procedures for cross-border relocation will lead to increased mobility and flexibility in the European insurance market. However, as the conduct of insurance business is still subject to national regulation and the application of the law of national court systems, there may be gaps and inconsistencies between jurisdictions, which could complicate cross-border restructuring processes.

In summary, the recent regulation introduces increased opportunities for non-Swedish insurance companies to relocate to Sweden, and vice versa. However, it is uncertain whether further legislation or guidance is needed to improve the harmonisation and streamlining of cross-border operations within the EEA.

Mannheimer Swartling Advokatbyrå AB

Norrlandsgatan 21
Box 1711
SE-111 87

+46 8 595 060 00

+46 8 595 060 01
Author Business Card

Law and Practice


Mannheimer Swartling Advokatbyrå AB is one of the leading business law firms in Sweden and advises clients around the world. The firm has offices in Sweden, Belgium, Singapore and the USA, and strives to provide the most high-quality advice in the market, whether a client is an entrepreneurial start-up or a global listed company employing thousands of people. The insurance practice group consists of four partners, one senior adviser and nine associates, and is highly experienced in advising on significant strategic projects as well as day-to-day operations, covering virtually all aspects of the insurance and reinsurance industries. Regular mandates include restructurings, domestic and cross-border distribution, insurance claims and disputes, product development, reinsurance arrangements and regulatory issues, including regulated cross-border transactions such as M&A and portfolio transfers. Clients include insureds, life and non-life insurance undertakings, reinsurers, intermediaries (brokers and agents) and other market professionals.

Trends and Development


Mannheimer Swartling Advokatbyrå AB is one of the leading business law firms in Sweden and advises clients around the world. The firm has offices in Sweden, Belgium, Singapore and the USA, and strives to provide the most high-quality advice in the market, whether a client is an entrepreneurial start-up or a global listed company employing thousands of people. The insurance practice group consists of four partners, one senior adviser and nine associates, and is highly experienced in advising on significant strategic projects as well as day-to-day operations, covering virtually all aspects of the insurance and reinsurance industries. Regular mandates include restructurings, domestic and cross-border distribution, insurance claims and disputes, product development, reinsurance arrangements and regulatory issues, including regulated cross-border transactions such as M&A and portfolio transfers. Clients include insureds, life and non-life insurance undertakings, reinsurers, intermediaries (brokers and agents) and other market professionals.

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