Statutory law is the primary source of law within the Swedish legal system. Statutory provisions are interpreted through preparatory work and case law. Preparatory work is regarded as an important source for ascertaining the legislative intent behind a provision, and is considered to offer an authoritative interpretation, provided that it is relevant and duly applicable. Although the Swedish courts are not formally bound by precedent, the lower courts typically treat higher court decisions as de facto binding in practice, particularly when adjudicating similar cases.

The main legal framework governing insurance and reinsurance business in Sweden includes the Insurance Business Act (Försäkringsrörelselag (2010:2043)) (the IBA) and the directly binding Commission Delegated Regulation (EU) 2015/35 (the Solvency II Regulation), alongside regulations and guidelines issued by the Swedish Financial Supervisory Authority (Finansinspektionen) (the Swedish FSA) and the European Insurance and Occupational Pensions Authority (EIOPA).

The Insurance Distribution Act (Lag (2018:1219) om försäkringsdistribution) (the IDA) applies to all distributors of insurance and reinsurance products. It is supplemented by implementing and delegated acts under the Directive (EU) 2016/97 of the European Parliament and of the Council on Insurance Distribution (the IDD), regulations and guidelines issued by the Swedish FSA, and guidelines issued by EIOPA.

The main legal framework for foreign insurers conducting business in Sweden is the Foreign Insurance Activities Act (Lag (1998:293) om utländska försäkringsgivares och tjänstepensionsinstituts verksamhet i Sverige) (the FIAA).

Insurance contracts governed by Swedish law must comply with the Swedish Insurance Contracts Act (Försäkringsavtalslagen (2005:104)) (the ICA). The ICA does not apply to reinsurance contracts. The applicable law for insurance contracts concerning risks situated in Sweden is determined by Regulation (EC) No 593/2008 of the European Parliament and of the Council on the law applicable to contractual obligations (the Rome I Regulation), which restricts the parties’ freedom to choose applicable law.

The Swedish FSA is responsible for the supervision, authorisations, sanction assessments, regulations and reporting matters of the insurance industry. For cross-border activities within the EU, the Swedish FSA cooperates with other member states’ regulatory bodies.

The IBA and the Solvency II Regulation constitute the main legal framework applicable to insurance and reinsurance business in Sweden. Supplementary company law for most insurance companies is provided in the Swedish Companies Act (Aktiebolagslagen (2005:551)) (the SCA). In addition, the Swedish FSA issues regulations and general guidelines that must be observed. Guidelines and recommendations issued by EIOPA have, upon translation into Swedish, the same status as the Swedish FSA’s general guidelines. In other words, they must be followed, but firms can determine the manner in which they meet requirements on a “comply or explain” basis.

Foreign insurance undertakings conducting insurance business in Sweden are primarily subject to the FIAA and regulations and general guidelines issued by the Swedish FSA.

The ICA must be adhered to if the insurance contract is governed by Swedish law. The ICA does not apply to reinsurance contracts. The choice of applicable law on insurance contracts concerning risks situated in Sweden is governed by Regulation (EC) No 593/2008 of the European Parliament and of the Council on the law applicable to contractual obligations (the Rome I Regulation), which restricts the right of the parties to choose the applicable law.

The marketing of insurance services in Sweden, whether such services are provided by Swedish or non-Swedish insurers, is regulated by the Swedish Marketing Act (Marknadsföringslagen (2008:486)) and regulations and recommendations issued by the Swedish FSA.

A Swedish company may conduct insurance or reinsurance business in Sweden only after having been duly authorised by the Swedish FSA pursuant to the IBA. Authorisation is only granted to a company limited by shares (försäkringsaktiebolag) (insurance company), a mutual insurance undertaking (ömsesidigt försäkringsbolag) (mutual insurance company) or an insurance association (försäkringsförening) (insurance association).

Authorisation to conduct insurance business in Sweden is granted when the requirements defining governing insurance operations are satisfied. The application will be evaluated based on the merits of the management and the owners controlling 10% or more of the share capital or votes, or a holding stake that permits significant influence over the management of that undertaking (a qualifying holding), as well as the nature of the planned business and the amount of capital. In order for an authorisation to be granted, the applicant’s articles of association must be compliant with the IBA, and the proposed business must align with the relevant laws and regulations regarding the business of the applicant. In addition, the holder of a qualifying stake in an insurance undertaking must be judged to be appropriate to exercise a significant influence over the management of the undertaking, including meeting good-standing and capital-strength requirements. Lastly, the persons involved in the management of, or in charge of, key functions, must possess the knowledge and experience deemed to be sufficient, as well as being considered as fit and proper persons in this respect. An authorisation is in general valid indefinitely, but can be withdrawn if there is serious breach of legislation.

Authorisation for a company to conduct insurance business means that it may carry out the activity set out its articles of association, which must state which insurance classes apply for the businesses for which the company intends to provide insurance. It is not a requirement to specify in the articles of association whether the insurance business will target consumers, SMEs or corporates. There are no specific differences from a regulatory perspective regarding requirements for writing consumer insurance, SME insurance or commercial insurance in Sweden (for differences from an insurance contract perspective, see 6. Making an Insurance Contract). However, the authorisation from the Swedish FSA to conduct insurance business is specifically tied to the insurance class/es applied for in the granted authorisation, and therefore limits the type of insurance an insurance undertaking might offer.

In terms of insurance distribution, there are certain exemptions from the requirements set out in the IDA in respect of large risks and reinsurance. Such exemptions correspond to the exemptions for large risks and reinsurance in the IDD.

Insurance premiums are generally not subject to taxation. However, exceptions apply to premiums for third-party liability motor insurance, which are taxable. Insurance premiums are excluded from VAT.

Foreign Insurance and Reinsurance Undertakings Authorised and Established Within the EEA

A foreign insurer established and authorised within the EEA and which is not a reinsurance undertaking may carry out business on a cross-border basis in Sweden without applying for authorisation. However, before doing so, the undertaking must notify its home supervisory authority. Passive provision of such services in respect of risks situated in Sweden (ie, the provision of insurance services on the sole initiative of the client) would also require a prior notification.

A foreign reinsurer authorised and established within the EEA may carry out reinsurance business in Sweden from a branch or general agency, or write business on a cross-border basis without applying for authorisation or notifying its home supervisory authority.

Undertakings domiciled within the EEA with branches in Sweden are subject to financial supervision (ie, where appropriate, supervision of solvency, technical provisions and assets covering technical provisions) from the competent supervisory authority of their home state. However, the Swedish FSA is responsible for overseeing in general (and for the general good) that, among other things, the undertakings fulfil their obligation to provide information to their policyholders. The undertakings are therefore still liable for providing the Swedish FSA with certain information, although not on a continuous basis. In addition, the Swedish FSA monitors the organisation of compliance functions and claims adjustment and complaint procedures of EEA branches in Sweden.

Foreign Insurance and Reinsurance Undertakings Authorised and Established Outside the EEA

Insurance and reinsurance undertakings domiciled outside the EEA (third-country undertakings) are subject to stricter regulations in Sweden than EEA insurers. They may conduct business in Sweden if they have obtained a license from the Swedish FSA. Their business may be conducted through an agency or a branch, but only if a major deposit is made with a Swedish bank. Agreements between Switzerland and the European Union enable Swiss non-life insurance undertakings to be authorised to establish either an agency or a branch in Sweden without a deposit. Further, according to an agreement between the EU and the US, certain exemptions apply for US insurers and reinsurers.

Insurers and reinsurers domiciled outside the EEA may provide cross-border services in Sweden through intermediation by an insurer licensed in Sweden and subject to a specific permit from the Swedish FSA. Further, non-EEA insurers are entitled to provide “passive” insurance services with respect to risks situated in Sweden (ie, the provision of insurance services on the sole initiative of the client) without a licence.

The main rule regarding Swedish agencies and branches of undertakings domiciled outside the EEA is that the entire activity in Sweden is to be supervised by the Swedish FSA since they need a permit to carry on insurance operations in Sweden.

Fronting typically refers to a collaboration between two insurance companies where one company (the fronting insurer) issues an insurance policy to the policyholder and assumes the entire insured risk in its own name. However, the fronting insurer transfers most or all of the risk to another insurer (usually through a reinsurance agreement) and does not retain the risk on its own balance sheet. This arrangement can be disclosed or undisclosed to the policyholder, depending on the context. 

In early preparatory work, the legislator noted that fronting did not always align with good business ethics. However, this statement must be understood in the context of the fact that fronting, at that time, was rare in Sweden. Since then, reinsurance from abroad has become subject to the provisions of the FIAA, reducing the risk of circumventing authorisation requirements as the inquiry had feared. Additionally, fronting has become more common in Sweden over time, and the industry’s stance on the practice has evolved accordingly. A key condition for fronting to be considered permissible, however, is that there must be no ambiguity regarding the fronting insurer’s direct responsibility to policyholders. Consequently, fronting cannot, in and of itself, be regarded as an activity devoid of insurance risk.

In an opinion issued on 11 July 2017, in the context of Brexit, EIOPA raised concerns that UK undertakings might attempt to establish a foothold in the EU by setting up subsidiaries in member states in ways that hinder effective regulatory oversight. EIOPA warned that such subsidiaries, through under-staffing, outsourcing and reinsurance, run the risk of functioning merely as empty shells. Regarding fronting through subsidiaries of insurers outside the EU, EIOPA has recommended that supervisory authorities require the subsidiaries to retain at least 10% of the risk on their own account, rather than reinsuring all of it.

Acquisition of a Qualified Holding of Shares in an Insurance or Reinsurance Undertaking

A direct or indirect acquisition of shares in an insurance undertaking, which results in the acquirer’s total holding becoming a qualified holding, requires authorisation from the Swedish FSA. A qualified holding is a direct or indirect holding in a company which represents 10% or more of the capital or voting rights, or which otherwise makes it possible to exercise a significant influence over the management of the company. The same requirements apply to acquisitions that increase a qualifying holding to the point where it amounts to or exceeds 20%, 30% or 50% of the share capital or the voting rights, or such that the insurance undertaking becomes a subsidiary. Authorisation must be sought prior to the acquisition of shares.

If an acquirer has already obtained authorisation from the Swedish FSA for a specific threshold, but intends to increase its total holding to meet or exceed a new threshold, prior authorisation from the Swedish FSA is required. Similarly, if the acquirer decides to dispose of a qualified holding or a significant portion thereof, causing the remaining holding to fall below any threshold, the acquirer must notify the Swedish FSA in writing.

According to the Swedish Foreign Direct Investment Act (the SFDI) implemented under Regulation EU 2019/45 for the screening of foreign direct investment (FDI) in the Union, an acquisition of shares in an insurance undertaking may, under certain circumstances, require authorisation under the SFDI.

Transfer of Insurance Portfolios

A (re)insurer authorised under the IBA or the FIAA may, wholly or partially, transfer a portfolio of (re)insurance to a (re)insurer authorised to conduct insurance or reinsurance business in Sweden or in another EEA country. Such transfers are subject to procedural rules and approval by the Swedish FSA.

Trends in M&A in the Insurance Area

Due to increased legislation and requirements on insurance undertakings, a trend within the insurance M&A market is for smaller insurance undertakings to consolidate, most often through portfolio transfers, into larger Swedish insurance undertakings. A further trend in the Swedish insurance market is for the consolidation of smaller insurance intermediaries to create larger intermediary companies, many of which are owned by private equity firms. We have also seen examples lately of major insurance undertakings acquiring fintech insurance intermediaries.

Regulatory Requirements for Insurance Distribution

The distribution of insurance and reinsurance products is regulated by the IDA which brings into effect the IDD, implementing and delegated acts under the IDD, regulations and guidelines issued by the Swedish FSA and guidelines issued by EIOPA.

The IDA applies to those who: 1) advise on or propose insurance contracts or carry out other work preparatory to the conclusion of insurance contracts; 2) conclude insurance contracts; and 3) assist in the administration or performance of insurance contracts.

An insurance intermediary must be duly authorised by the Swedish FSA pursuant to the IDA or registered with the Swedish Companies Registration Office as a tied insurance intermediary for an insurance undertaking under a distribution agreement. The distribution agreement must ensure that the insurance undertaking is liable for any pure economic loss resulting from the tied distributor’s liability 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. The distribution of insurance-based investment products or occupational pensions exposed to market fluctuations requires a licence from the Swedish FSA.

The general rules of the IDD are implemented in Sweden through the IDA in a manner consistent with the directive, including the general exemptions for large risks and reinsurance. There are, however, some areas where the Swedish legislator and the Swedish FSA have exercised the possibility of implementing stricter requirements than those set out in the IDD (“gold-plating”). Such gold-plated provisions include, for example, requirements regarding knowledge and competence for employees, professional indemnity insurance, internal policies and procedures, and complaints handling. In addition, certain provisions regarding remuneration are stricter than those set out in the IDD. Further, the IDA places strong emphasis on conflict-of-interest matters arising from remuneration received from third parties. For instance, insurance intermediaries that provide advice based on a fair and personal analysis are prohibited from accepting and retaining remuneration from any other person than the customer.

Types of Insurance Distributors Active on the Swedish Market

Insurance is distributed through the following channels in Sweden:

• direct sales by insurance companies;
• agents or tied insurance intermediaries;
• brokers and authorised insurance intermediaries which are not contractually obligated to distribute insurance exclusively on behalf of one or more insurance undertakings; and
• bancassurance and other channels.

The ICA applies irrespective of whether the terms of the insurance contract have been subject to negotiation or not.

The Insured Party’s Obligations

According to the ICA, a policyholder who acquires, extends, or renews an insurance policy has an obligation to provide information which may affect the undertaking’s decision to issue the insurance, upon the request of the insurance undertaking. The policyholder has an obligation to provide true and complete answers to the insurance undertaking’s questions. This obligation continues throughout the entire insurance period.

For non-consumer insurances, the policyholder must, without inquiry by the insurance undertaking, also provide information that is clearly significant for the risk assessment.

The insurer may also provide in the contract terms and conditions that the policyholder will report to the company any change in circumstance specified in the contract and which is of material significance in respect of the risk.

If the policyholder fails to inform or notify the undertaking, the insurance compensation may be reduced. The reduction is based on, inter alia, the significance which the fact would have had for the insurance undertaking’s risk assessment and whether the disregard was intentional or negligent. If the policyholder has acted fraudulently or in bad faith in fulfilling the obligation to inform the insurer, the contract is void. This applies to both consumer insurance and commercial insurance.

The Insurer’s Obligations

The ICA contains provisions obligating the insurance undertaking to inform the policyholder prior to issuance when the contract has been executed and in conjunction with renewal of the insurance policy.

The insurance undertaking must, prior to the issuance of any insurance, provide information which facilitates the customer’s assessment of the need for, and choice of, such insurance. Important limitations to the insurance must be set forth clearly. Immediately after the contract is executed, the insurance undertaking will provide the policyholder with written confirmation, and advise the policyholder of the terms and conditions of the insurance policy. During the insurance period and at the time of renewal, the insurance undertaking must inform the policyholder of any circumstances that are of concern. If the insurance undertaking makes certain amendments to the insurance policy, it must also inform the insured party of such amendments.

For non-consumer insurance, the insurance undertaking must fulfil information requirements to the policyholder, unless it can be reasonably assumed that the customer does not require the information.

Please see 6.1 Obligations of the Insured and Insurer.

Insurance intermediaries may be involved in the negotiation of insurance contracts on behalf of the insured or the insurer. Insurance intermediaries must comply with certain obligations in accordance with the IDA, regardless of if they represent the insured or the insurer.

There are no legal requirements set forth in Swedish law regarding the definition of an insurance contract. However, the distinguishing features of insurance contracts have been established through preparatory works and case law. An insurance contract should essentially mean an agreement between an insurance undertaking and a policyholder that is characterised by the fact that, in return for a consideration (an insurance premium), the insurance undertaking agrees to pay compensation or a certain amount upon what is referred to as an “insured event”.

A basic prerequisite for the payment of insurance compensation is that the payment relates to a legitimate interest. According to general principles of law, agreements on insurance of unlawful interests are not binding. Examples of unlawful interests include fines (due to negligent offences) and environmental penalty fees (payable due to negligent conduct).

The Swedish FSA has stated in a legal position that the provision of insurance against fines and administrative sanction fees is not consistent with good insurance standards. This applies to both Swedish insurance undertakings and foreign insurers conducting business in Sweden.

Non-insured parties can be beneficiaries of an insurance contract under Swedish law.

The ICA includes provisions granting a third party who holds a security interest in real property or a ground lease the right to receive insurance compensation under a policy covering the property’s value. Similarly, unless expressly stipulated otherwise in the insurance policy, a security interest in movable property may also confer rights to such compensation.

Swedish law imposes a duty on insurance undertakings to inform the parties to an insurance contract on certain matters. However, there is no legal requirement to obtain the beneficiary’s consent or notify them of the contract. On the contrary, personal data showing that a policyholder has arranged future insurance payouts in favour of another person, which is processed in accordance with the General Data Protection Regulation (GDPR), must not be disclosed to the beneficiary. Consequently, the insurance undertaking may be prohibited by law from sharing certain information with the beneficiary.

The ICA is mandatory for both consumer insurance contracts and commercial insurance contracts. However, for consumer insurance contracts, the ICA stipulates more onerous obligations on the insurer and more lenient obligations on the insured party than in respect of commercial insurance contracts.

The ICA does not govern reinsurance contracts, instead, the Swedish Contracts Act (Lag (1915:218) om avtal och andra rättshandlingar på förmögenhetsrättens område) is applicable. This means that parties to reinsurance contracts have greater contractual freedom, limited mainly by the general restrictions in the Swedish Contracts Act and international law.

Alternative Risk Transfers (ART) are essentially substitute risk management and finance strategies to the traditional direct insurance marketplace, either by transferring risk through alternative products or transferring risk to alternative carriers. In Sweden, the use of ART remains relatively limited.

A broad interpretation of ART transactions includes financing risk through a captive insurance company – an insurance entity that exclusively (re)insures the risks of its parent company or other group companies. Interest in establishing captives has increased globally in recent years, a trend also observed in Sweden.

Notably, in 2024, the Swedish fashion retailer H&M received authorisation from the Swedish FSA to establish a captive insurance company.

If the contract meets the Solvency II regulations criteria for recognition as a risk mitigant, ART transactions from other jurisdictions may be treated as reinsurance contracts in Sweden.

There are no Swedish statutory provisions concerning interpretation of insurance contracts. However, in Swedish case law, there have been various interpretive methods developed when interpreting insurance contracts. Because insurance contracts are typically based on non-negotiable standard forms, the common intention of the parties is difficult to ascertain in practice. Instead, the starting point in the interpretation of insurance terms is typically the objective wording of the contract. Besides the wording, the following points should be considered when interpreting an insurance contract:

• the purpose of the clause;
• the nature of the insurance and its customer base;
• traditions in terms of wording;
• consistency with the legal terminology; and
• common practice.

That which is objectively reasonable and proportionate must also be assessed. Only if no result can be achieved using such criteria is there reason to fall back on other, more general principles of contract interpretation.

Swedish procedural law allows for the free sifting of evidence. Extraneous evidence is therefore admissible in the construction when there is a dispute over the meaning of an insurance contract. This means that external circumstances – such as evidence about negotiations or written communication relating to the agreement – are permitted.

Warranties in an insurance contract refer to the specific promises made by the policyholder, in which they guarantee to either take or refrain from taking certain actions. Through warranties, the insurance undertaking limits its risk.

It is uncommon for Swedish insurance contracts to include warranties as outlined above. However, it is standard for these contracts to contain safety instructions. If a policyholder fails to adhere to the specified security provision, they risk having their insurance indemnity reduced or denied in the event of a claim. One common security provision is that the policyholder must handle and store property with care to minimise the risk of damage or loss. This requirement is typically more stringent for valuable items, and the policyholder must never leave such property unattended. The insurer must emphasise the security provision to the insured party, otherwise it cannot be enforced.

Conditions precedents to the validity of the insurance contract and the attachment of risk or to the insurer’s liability are, to some extent, subject to mandatory provisions in the ICA.

If payment of the initial premium is a condition precedent to risk for a consumer insurance, this must be set out in the policy terms. As regards ongoing payment of premiums, the ICA expressly regulates when and how the insurance contract can be terminated due to late payments. The requirements are mandatory for the benefit of the insured. There are mandatory provisions regarding termination due to late payments with respect both to consumer insurance and commercial insurance, although the provisions regarding commercial insurance are less strict.

In respect of commercial insurance, the parties are free to agree on the commencement of the insurer’s obligations under the insurance contracts. This condition precedent for risk must not be expressly described; it can also be apparent from the circumstances.

Conditions precedent to liability must be clearly set out in the policy terms or in statutory provision referred to in the policy (a security provision), see 8.2 Warranties. In the event of a breach of a security provision in a consumer insurance contract, the insurance compensation to the insured party may be reduced in accordance with what is reasonable in light of the nexus of such failure, the loss, whether there was negligence or intent, and other circumstances. In respect of a breach of a security provision in a commercial insurance contract, compensation from the insurance policy shall be paid only to the extent that it can be deemed that the damage would have occurred even in the event of compliance with the provision. A party with the obligation to ensure compliance with the provision is, in this respect, equated with the insured.

Disputes

In Sweden, there are no courts specialised in insurance disputes. Instead, insurance disputes are, as for all civil actions, commenced at the competent local District Court regardless of the value of the dispute. However, as a general rule, the Swedish Procedural Code permits agreements on exclusive jurisdiction of a specific court in a jurisdiction clause. For reinsurance and non-consumer insurance, an arbitration clause is often preferred.

Limitations

Under the ICA, an insurance claim against an insurer must be made within ten years of the insured event. The deadline for initiating legal action is ten years and six months, provided that the policyholder has submitted a claim to the insurance undertaking within the ten-year period.

For non-consumer insurance, the insurance undertaking may require legal action to be initiated within a shorter time frame. This requirement must be made in writing. However, the time period may not be shorter than one year from the date on which the insured receives the written notice.

Third Parties

The main rule under Swedish law is that agreements can confer rights and obligations only on the parties entering into the agreement. However, under certain circumstances, third parties may derive rights from an agreement.

According to the ICA, there are three situations in which a third party with a claim on the policyholder has the right to claim compensation directly from the insurance undertaking providing the liability insurance, as follows:

1. where the policyholder is obligated by law to hold liability insurance;
2. where the policyholder has entered into bankruptcy or reconstruction, and a reconstruction plan under the Swedish Act on Corporate Reconstruction (2022:964) has been approved; and
3. where the policyholder is a legal entity that has been dissolved.

Additionally, a third party can have rights as a beneficiary under a life insurance policy. A policyholder with a life insurance policy offering survivor’s benefits has the right to designate a beneficiary. This may include naming a specific person or specifying a relationship, such as “spouse” or “children”. If no beneficiary is designated, the insurance compensation will be distributed to the deceased’s estate.

If Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels I Regulation) or the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Lugano Convention) is applicable, the jurisdiction is decided under those provisions.

If neither the Brussels I Regulation, Lugano Convention nor any other rules on jurisdiction are applicable, the jurisdiction will be decided by an analogous application of the provisions on jurisdiction in the Swedish Code of Judicial Procedure (Rättegångsbalken (1942:740)).

The applicable law is decided by the Rome I Regulation.

Initiating a Litigation Process

To initiate a litigation process in Sweden, the claimant must submit a petition to the district court that has jurisdiction. The petition must include at least the following:

• information about the claimant;
• a claim, which can be a declaratory action or performance action;
• a description of the background of the claim;
• a description of the evidence supporting the claim; and
• a request for processing where the claimant describes whether the case can be decided in writing or if a main hearing is necessary.

If the petition meets these requirements, the court will serve the respondent with the claim and provide them an opportunity to respond. After the initial claim and response from the respondent, there are usually exchanges between the parties as part of the preparations for the hearing.

Hearings

The hearing is the final step of the litigation process. During the hearing, both the claimant and the respondent present their cases in front of the court. The principle of oral proceedings applies during hearings, meaning that the parties must present their case verbally, including any evidence.

The court is only allowed to base their judgment on what is presented during the hearing, and a judgment may not be rendered on anything other or more than what a party has duly requested.

Judgment and Leave to Appeal

The main rule is that the judgment must be presented the same day as the hearing or the next working day. However, the short time frame is often not feasible in larger or more complex cases. Therefore, the law allows the court to grant an extension for delivering the judgment. In civil cases, the time limit may not exceed two weeks unless there are exceptional reasons.

A leave of appeal is required for a civil case to be tried in the second instance by the Court of Appeal, as well as in the last instance by the Supreme Court. Statistics from 2015 show that a leave of appeal was granted in approximately 60% of all commercial disputes which were appealed to the Svea Court of Appeal in Stockholm. In the Supreme Court, however, the possibility of being granted a leave of appeal in a commercial case is limited, being permitted only for such cases that are of interest in terms of constituting a precedent.

Swedish judgments or orders are automatically enforceable in Sweden.

For foreign judgments, if the Brussels I Regulation and Lugano convention is applicable, judgments are enforced under those provisions. Judgments or orders made by countries are generally not recognised in Sweden when there is no bilateral agreement between Sweden and the third country in question.

For non-consumer insurance and reinsurance contracts, arbitration clauses can be enforced according to Swedish law.

Under the SCA, an arbitration clause may be declared void if its enforcement would be considered unreasonable due to one of the parties holding an inferior bargaining position in the contractual relationship. In case law, this provision has been applicable in commercial settings primarily when one party’s position resembles that of a consumer, such as in cases involving small businesses.

Sweden has signed and ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and arbitral awards are generally enforceable in Sweden. The Swedish Arbitration Act (Lag (1999:116) om skiljeförfarande) governs the enforcement of arbitration proceedings for both domestic and international arbitrations.

Arbitral awards issued in Sweden are enforceable in Sweden in the same way as a judgment from a national court. Foreign arbitral awards are enforced in Sweden after exequatur proceedings. The latter means that an application must be submitted to the Svea Court of Appeal, and the application will be granted unless the opposing party has had the opportunity to present its case. This allows the opposing party to challenge the enforcement.

According to the Swedish Code of Judicial Procedure, the courts have an obligation to work toward the parties reaching a settlement or, otherwise, an amicable solution, unless it is considered inappropriate due to the circumstances in the case. If the parties agree, the court can decide to initiate mediation between the parties. In such cases, a mediator is appointed, and the parties are summoned to a meeting with the mediator.

According to the ICA, an insurance undertaking which has been advised of an insured event must take the measures necessary to settle the claim. These measures must be implemented quickly and take into account the interests of the insured and other injured parties. As a general rule, insurance compensation is paid out within one month of the entitled party reporting the insured event and submitting any necessary documentation reasonably required to verify the obligation to pay. If the party making the claim for compensation is clearly entitled to at least a certain amount, this must be paid immediately. These provisions are mandatory for consumer insurance, but can be negotiated for non-consumer insurance.

If the insurance undertaking fails to pay in time, it is obliged to pay interest in accordance with the Swedish Interest Act (Räntelagen (1975:635)). The insurance undertaking also has obligations under the IBA to act in accordance with good insurance standards. Serious or repeated violations of the ICA may therefore lead to sanctions by the Swedish FSA.

As outlined in 9.1 Insurance Disputes Over Coverage, the insured party may, under certain circumstances, assume responsibility for the claim in cases involving liability insurance.

The insurance market is being challenged by digital innovation, mainly with respect to the conclusion of contracts, although also to some extent with regards to claims handling, where some undertakings use AI and chatbots to process claims.

Web Scraping

Many startup insurers and insurance intermediaries provide comparisons between policy terms through web scraping insurance coverage details from providers’ websites. Web scraping is used to log in on behalf of the policyholder to their existing providers of insurance to gather information for collection onto a single platform.

The question of web scraping has been discussed by EIOPA in a discussion paper from 2023, but the question has not yet been addressed by the Swedish legislator.

App-Based Insurance

Insurance products managed through mobile apps are becoming increasingly popular and more common. Many insurance undertakings and intermediaries offer solutions that allow policyholders to purchase insurance and file claims directly through the apps. This digital approach enhances convenience, providing users with quick access to coverage and streamlined claim reporting. Even other established insurance undertakings are starting to offer services through mobile apps.

In 2017, the Swedish FSA established an innovation centre with the task of being its first point of contact for companies that are uncertain about rules, processes and principles on the financial market in connection with innovations. The aim with the innovation centre is to provide companies with the information they need to move forward in a simpler and faster way.

PFAS-Related Injuries

In recent case law, the Swedish Supreme Court has established that elevated levels of PFAS in the blood constitute a compensable personal injury under tort law. The PFAS liability issues have raised several fundamental concepts of tort law but also questions in the insurance area.

Claims related to PFAS present a challenge for insurance companies, as these claims have evolved from being solely environmental to now involving personal injuries, which could lead to high liability insurance costs. As a result, insurance companies have increasingly opted to deny PFAS-related claims, and some insurers have explicitly excluded PFAS-related injuries from coverage.

Cybersecurity

During the last few years, cyber-attacks have increased and insurance against cyber-attacks has become an increasing market for insurance undertakings. The Swedish FSA proposed measures to improve the strength of its supervision concerning cyber-related matters in May 2022.

Extreme Weather        

In 2023, the Swedish FSA issued a report regarding the Swedish non-life insurers’ response to certain flooding events in 2021. The Swedish FSA concluded that the risk of insolvency for Swedish non-life insurance companies as a result of natural catastrophes is low in the short term, provided that the reinsurance covers do not fail. In the longer term, this assessment may change due, mainly, to climate change altering the frequency or extent of the extreme weather events that may be expected in Sweden. Another possibility is that the global reinsurance market is negatively affected in terms of creditworthiness or capacity. The Swedish FSA further concluded that the analysis raised questions about the reasonableness of treating the risk of flooding in Sweden as negligible for capital-requirement purposes.

New products, such as insurance covering damages caused by cybersecurity in conjunction with the offering of associated services, such as consults specialised within cybersecurity, have been developed. Furthermore, the insurance market continues to develop new insurance products with the emerging risks.

Insurance Against Fines and Administrative Sanction Fees

In 2023, the Swedish FSA issued a legal position on insurance coverage for fines and administrative sanction fees, stating that such insurance is inconsistent with good insurance practices. According to the Swedish FSA, offering insurance for these penalties undermines their intended purpose by removing the legal consequences of regulatory infringements and diminishing the incentive for compliance. However, marine insurance, due to its international nature, is exempt from this stance, and requires separate consideration.

Consumer Protection in Transfers of Occupational Pension Capital

The market for transferring occupational pensions is increasingly lucrative, and the Swedish FSA has seen an increase in the transfer of occupational pension capital. According to the Swedish FSA, there are signs that the industry may be encouraging transfers for reasons other than ensuring that the insured person receives a better pension.

To ensure consumer protection, the Swedish FSA has concluded a round table discussion with industry stakeholders on how to prioritise consumers’ needs during such transfers.

Investigation on Recovery and Resolution of Insurance and Reinsurance Undertakings

The Swedish government has initiated an investigation into the integration of the EU directive establishing a framework for the recovery and resolution of insurance and reinsurance undertakings, along with amendments to the Solvency II directive, into Swedish law. The primary objective of these new regulations is to harmonise crisis-management protocols for insurance companies across the EU and enhance the resilience of Sweden’s insurance market.

The EU directive allows member states to adapt the rules to their specific national contexts. Accordingly, the investigation will assess the Swedish insurance sector, with a particular focus on mutual insurance companies, where policyholders also serve as shareholders.

Examination of Subordinated Loans and Sanction Fees

As part of this broader investigation, the government will evaluate the feasibility of allowing insurance undertakings to issue or assume subordinated loans to strengthen their capital base. Under current legislation, such undertakings can only issue or assume subordinated loans if they comply with the borrowing provisions in the IBA. Exceptions require prior approval from the Swedish FSA, which is rarely granted.

The investigation will also explore the introduction of sanction fees for acquiring or disposing of shares without prior approval from, or notification to, the Swedish FSA. For more detailed information on these requirements, please refer to 4.1 M&A Activities Relating to Insurance Companies.