LexisNexis
lslaw

The impact of Covid-19 on the global insurance industry – Sweden

Wednesday 13 July 2022

Fredrik Seemann
Norelid Advokatbyrå, Sweden
fredrik.seemann@norelidlaw.com

William Höglund
Norelid Advokatbyrå, Sweden
william.hoglund@norelidlaw.com

Johanna Eriksson
Norelid Advokatbyrå, Sweden
johanna.eriksson@norelidlaw.com

Sweden

General questions

Yes/No/ N/A

Additional comments, if any.

1

Does the country that you are reporting on follow common law jurisprudence?

No

2

If the answer to the above question is no, does the country you are reporting on follow a civil code? Please describe the judicial system in short.

Yes

The Swedish judicial system is to a large extent based on civil law, as written statutes constitute the primary legal source.

Nevertheless, the Swedish judicial system also heavily relies on case law when interpreting and applying legislation.

3

Please provide a brief description of the legal framework applicable to insurance coverage disputes in the country you are reporting on. In so doing, please consider the following questions:

Insurance contracts are governed by the Swedish Insurance Contracts Act (SICA). The SICA contains both optional and mandatory provisions. The mandatory provisions are in favour of the insured and in general the SICA can be considered to be favourable to the insured. This mainly applies to consumer insurance contracts, but also to some extent corporate insurance contracts. However, the SICA does not regulate the interpretation of insurance wordings, which has therefore instead been developed in case law.

According to case law, the objective interpretation of insurance clauses is to be based on the following: the language, the structure of the wording and the other insurance clauses in the wording. Additionally, factors such as the purpose of the insurance wording, how the insurance market generally manages similar clauses and wordings and what is deemed sensible and reasonable. The courts have not uniformly considered any of the factors to be decisive, instead the interpretation must be made based on an overall assessment of the individual case.

Moreover, Section 10 of the Consumer Contracts Act stipulates that uncertain contract terms, which have not been subject to individual negotiation, are to be interpreted in favour of the consumer.

4

Does the insured bear the burden of establishing coverage of a claim, or does the insurer bear the burden of establishing no coverage? Please give a short description of the legal basis in your country.

Yes

The main rules stipulate that the insured bears the burden of proof with regard to asserting that the event is within scope of the policy coverage clause.

The insurer bears the burden of proof regarding the applicability of any exclusions in the policy wording.

5

Are coverage provisions in policies interpreted broadly or is there a presumption in favour of coverage? Please give a short description of the legal basis in your country.

As a general rule, the plaintiff must ‘prove’ (Swedish: styrka) its claim in Swedish civil cases, but according to Swedish case law an insured is subject to a less demanding standard of proof in insurance disputes.

Consumers only have to prove that it is ‘more plausible’ that the circumstances are within scope of the policy coverage, than the counter-explanation offered by the insurer.

The above levels of standard of proof are general evidentiary requirements in insurance disputes, which in each case may vary depending on the circumstances at hand. For example, according to case law, consumers may be subject to the same standard of proof as a company depending on the circumstances in the individual case.

6

Are exclusions interpreted narrowly or is there a presumption against finding that an exclusion to coverage applies? Please give a short description of the legal basis in your country.

According to Swedish case law, the insurer is subject to the same standard of proof in insurance disputes as in civil cases in general, that is, ‘prove’.

7

Are there universally accepted definitions for:

  • event
  • occurrence
  • damage
  • cause
  • originating cause
  • natural peril
  • force majeure
  • loss
  • consequential loss

If the answer is yes, please give a short description of each definition and the legal basis for that definition (ie, a rule of law, case law etc).

As briefly described under Question 3, insurance wordings are generally interpreted in each individual case based on the individual circumstances at hand. Interpretation of standard insurance clauses that has been universally defined in case law is rare.

Nevertheless, certain definitions have been established in case law and most definitions are continuously discussed in legal literature.

event

No universal definition is established in either legislation or case law.

occurrence

Occurrence, as in the trigger for an insurance policy, has been examined in Swedish case law in regards several different types of damages and insurance products. Therefore, the interpretation of occurrence varies depending on if it concerns a property damage, a personal injury or pure financial loss.

damage

Damage is divided into separate sub-sections of categories of damages, for example, property damage (Swedish: sakskada), personal injury (personskada) and pure financial loss (ren förmögenhetsskada). What constitutes a damage has been examined in case law in regards these different types of damages.

cause

No universal definition established in either legislation or case law. However, interpretations of the principle of causality are repeatedly examined under tort law, which indirectly affects the interpretation of the definition cause in insurance wordings.

originating cause

No universal definition is established in either legislation or case law.

natural peril

No universal definition is established in either legislation or case law.

force majeure

No universal definition is established in either legislation or case law. However, during the pandemic, parties have claimed Covid-19 to be included in the general definition of force majeure to opt out of contracts. There is at this point no case law that confirms that Covid-19 is to be included in a general definition of force majeure, please see further information in the response to Question 53.

loss

No universal definition is established in either legislation or case law. However, there is both case law and legislation that defines the definition ‘direct loss’ opposed to ‘indirect loss’, or ‘consequential loss’.

consequential loss

Legislation, preparatory works and case law has provided guidance for the interpretation of consequential loss. However, there is no universally accepted definition covering all types of contractual clauses involving consequential loss.

Loss causation

Yes/ No/ N/A

Additional comments, if any.

8

Did the country that you are reporting about issue lockdown, stay-at-home or no-travel restrictions in response to Covid-19?

Yes

The Swedish stay-at-home restrictions was only a recommendation, that is, no penalty was issued towards individuals not adhering to the Covid guidelines and no lockdown orders were issued. However, there has been mandatory entry bans of varying degrees for non-Swedish citizens during the pandemic. Swedish citizens were able to travel in and out of the country at all times. However, the Swedish foreign office advised against non-essential travel, which affected insurance coverage for travellers.

9

If the answer to the question above is yes, were such orders issued nationally, by state/region or by local city/town. Please give a short description of the issuing authority and the orders issued.

Stay-at-home restrictions in the form of working-from-home and distance learning recommendations were issued, as well as restrictions on public gatherings and crowding in restaurants and entertainment venues.

For individuals, no strict restrictions regarding lockdown, stay-at-home or travel were issued. However, recommendations were issued regarding stay-at-home and domestic travel.

No mandatory lockdown or stay-at-home orders were issued, either for individuals or businesses. However, businesses were recommended to enable work-from-home to the greatest possible extent. Businesses in the hospitality sector, restaurants and similar establishments, were heavily affected by the Swedish public health authority’s recommendations on crowding. This was subsequently reinforced by a temporary law on disease control measures at restaurants at similar venues which enabled local authorities to issue orders and bans if a restaurant did not adhere to rules on crowding.

The restrictions were issued at a national level, with certain powers delegated to municipal level. The issuing authority for stay-at-home/work-from-home recommendations was the Swedish public health agency, whereas the issuing authority for restrictions, such as no-travel restrictions were issued by the Swedish government. The ban on public gatherings was not a definitive lockdown or stay-at-home restriction but did however have a massive impact on Swedish society. The legal basis for the ban was the Swedish Public Order Act, through which the government can issue regulations.

10

If the answer to the above question is yes, were the lockdown, stay-at-home or no-travel restrictions mandatory or recommended?

Stay-at-home/work-from-home measures and no-travel restrictions (including domestic travel) consisted of recommendations. No lockdown orders were issued. However, there was a firm entry ban on non-Swedish citizens.

11

If the country that you are reporting about did issue lockdown, stay-at-home, or no-travel restrictions, were those orders suspended or revoked at any point in time? If the answer is yes, please give a short description of the timeline.

Yes

On 13 March 2020, public gatherings greater than 500 persons were prohibited. This was further adjusted to more than 50 persons on 29 March 2020. No-travel restriction for non-essential travel from outside of the European Union/European Economic Area (EEA) was issued on 19 March 2020. The Public Health Agency of Sweden also advised against domestic travel on 19 March 2020, which was later voided on 13 June 2020. During March 2020, the Public Health Agency of Sweden issued recommendations on social distancing and recommended that all employers facilitate work-from-home for their employees. Travel restrictions for non-Swedish citizens was issued in March 2020. In late March 2020, restrictions for restaurants were issued to prevent crowding.

Restrictions were relaxed during summer of 2020, generally starting from 13 June 2020, consisting of lifting of the no-travel recommendation. On 1 October 2020, the public health agency issued a recommendation that anyone living with a person who had Covid-19 should work from home. On 19 October 2020, the public health agency issues recommendations that may be used for a limited time within a defined geographical area, for example, recommendations on limiting travelling and physical contact with others. In late November 2020, the ban on public gatherings was tightened to allow public gatherings of only up to eight people. In late December 2020, restaurants were forced to close at 2030 and the sale of alcohol was prohibited after 2000.

On 7 January 2021, the Swedish public health agency issued guidelines recommending the use of protective face masks in public transport, initially only during rush hour and during times of similar crowding. On 10 January 2021, a new pandemic law came into force in conjunction with regulations from the public health agency. The law enables the government and in some cases municipalities to issue regulations aimed at individuals and businesses, with the possibility of issuing penalties to both individuals and businesses. On 1 March 2021, the government and public health agency issued a decision that restaurants must close between 2030 and 0500.

Restaurant closing times were amended on 1 June 2021, extending opening times to 2230. On 1 July 2021, recommendations regarding social distancing and face masks on public transport were revoked, as well as restrictions on restaurant opening hours.

On 29 September 2021, the public health agency’s recommendations regarding work-from-home were lifted. Restrictions on public gatherings were also lifted, as well as any remaining restrictions for restaurants and similar establishments.

The entry ban for non-Swedish citizens was subsequently extended on several occasions. For non-EU travellers restrictions will be in place until 31 January 2022. There are, however, numerous exceptions to the entry ban and no-travel restrictions, which change from time to time.

12

If the answer to the above question is yes, were subsequent lockdown, stay-at-home or no-travel restrictions issued at any point in time? Please give a short description of the timeline.

Yes

See the timeline in our response to Question 11.

13

Has the country that you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a ‘cause’ of insured loss?

No

14

Has the highest court in the country you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a ‘cause’ of insured loss? If the answer is yes, please give a short description of the conclusions in the judicial opinions or guidance.

No

15

If the answer to the question above is yes, did the highest court in the country you are reporting about determine that losses related to Covid-19 were ‘caused’ by the virus? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

16

If the answer to the above question is no, did the highest court in the country you are reporting about determine that losses related to Covid-19 were ‘caused’ by government lockdown or stay-at-home orders? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

17

Has the country that you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is an ‘originating cause’ of insured loss? If the answer is yes, please give a short description of the conclusions in the judicial opinions or guidance.

N/A

18

If the highest court in the country you are reporting about has not issued judicial opinions or guidance analysing whether Covid-19 is a ‘cause’ of insured loss, have other courts in the country issued such opinions?

No

No. However, Swedish courts have examined certain epidemic business interruption insurances, see Question 21.

19

If the answer to the above question is yes, have courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether Covid-19 is a ‘cause’ of insured loss? Please give a short description of the conclusions in the judicial opinions or guidance.

Yes

See Question 21.

20

If the answer to the above question is yes, do courts in the country you are reporting about hold that losses related to Covid-19 were ‘caused’ by the virus? Please give a short description of the conclusions in the judicial opinions or guidance.

No

No. However Swedish courts have examined certain epidemic business interruption insurances, see Question 21.

21

If the answer to the above question is no, do courts in the country you are reporting about determine that losses related to Covid-19 were ‘caused’ by government lockdown or stay-at-home orders? Please give a short description of the conclusions in the judicial opinions or guidance.

According to three district court cases (encompassing three different insurance companies’ policy wordings), it was clear that public authority regulations issued due to Covid-19 had required considerable limitations to the operations of certain venues/establishments. The regulations were, however, not aimed specifically at the venue. The applicable insurance policies did not contain a definition of the concept ‘public authority measure’. It is therefore difficult to determine whether losses related to Covid-19 were ‘caused’ by public authority measures, as the courts have so far rejected claims for insurance coverage in these cases.

The courts therefore interpreted the insurance policies to the effect that ‘public authority measures’ refers to a decision directed at a specific place of business.

One of the court cases referenced above have been appealed and is currently in progress. There are also other ongoing court cases regarding epidemic business interruption claims that have yet to be adjudicated.

22

Has the highest court in the country you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is an ‘originating cause’ of insured loss?

No

23

If the highest court in the country you are reporting about has not issued judicial opinions or guidance analysing whether Covid-19 is an ‘originating cause’ of insured loss, have other courts in the country issued such opinions? If yes, please give a short description of the conclusions in such judicial opinions or guidance.

No

24

Has the country that you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a covered ‘event’?

No

25

Has the highest court in the country you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a covered ‘event’? Please give a short description of the conclusions in the judicial opinions or guidance.

No

26

If the answer to the question above is yes, did the highest court in the country you are reporting about determine that losses related to Covid-19 were covered ‘events’? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

27

If the highest court in the country you are reporting about has not issued judicial opinions or guidance analysing whether Covid-19 is a covered ‘event’, have other courts in the country issued such opinions?

No

28

If the answer to the above question is yes, have courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether Covid-19 is a covered ‘event’? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

29

If the answer to the above question is yes, do courts in the country you are reporting about hold that losses related to Covid-19 are covered ‘events’? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

30

If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 in the context of loss causation.

Aggregation of claims

Yes/ No/ N/A

Additional comments, if any.

31

Does the country you are reporting on permit aggregation of claims arising out of a single originating cause? Please give a short description of the legal basis.

Yes

In general, insurers are free to design insurance products in the way they choose (ie, freedom of contract applies). The SICA contains both optional and mandatory provisions. The mandatory provisions are in favour of the insured and in general the SICA can be considered to be favourable to the insured. Aggregation of claims is therefore an issue related to the drafting and interpretation of any given insurance policy wording.

32

Does the country you are reporting on permit aggregation of claims arising out of a single cause? Please give a short description of the legal basis.

Yes

Please see Question 31.

33

Does the country you are reporting on permit aggregation of claims arising out of a single event? Please give a short description of the legal basis.

Yes

Please see Question 31.

34

Does the country you are reporting on use an accepted test for determining whether claims can be aggregated? For example, does the country you are reporting on apply to four unities test to determine whether aggregation is appropriate? Please give a short description of the legal basis.

No

No specific test for aggregated claims exists.

However, according to case law concerning the interpretation of insurance wordings in general, an insurance policy is initially to be interpreted subjectively, that is, based on what the parties are considered to have agreed. If that cannot be determined, the contract is to be interpreted objectively.

According to case law, the objective interpretation of insurance clauses is to be based on the language, the structure of the wording, and the other insurance clauses in the wording. Additionally, factors such as the purpose of the insurance wording, how the insurance market generally manages similar clauses and wordings and what is deemed sensible and reasonable can be taken into consideration according to case law. The courts have not uniformly considered any of the factors to be decisive, instead the interpretation must be made based on an overall assessment of the individual case.

35

Have courts in the country you are reporting on issued jurisprudence concerning whether insureds can aggregate claims arising out of Covid-19? Please give a short description of the legal basis.

No

36

Has the highest court in the country you are reporting about issued judicial opinions or guidance concerning whether insureds can aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

No

37

If the answer to the question above is yes, did the highest court in the country you are reporting about determine whether insureds can aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

38

If the highest court in the country you are reporting on has not issued such jurisprudence, have other courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether insureds may aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

39

If the answer to the above question is yes, do courts in the country you are reporting about permit insureds to aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

40

Do the courts in the country you are reporting on permit an insured to aggregate claims related to multiple properties or business locations arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

This has not been examined in court. However, since there is no general prohibition, it depends on the interpretation of the insurance policy wording.

41

Do the courts in the country you are reporting on permit an insured to aggregate claims related to multiple lockdown or stay-at-home orders arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

This has not been examined in court. However, since there is no general prohibition, it depends on the interpretation of the insurance policy wording.

42

Have courts in the country you are reporting on issued jurisprudence concerning whether cedents can aggregate claims arising out of Covid-19? Please give a short description of the legal basis.

No

43

If the answer to the above question is yes, have courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether cedents may aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

44

If the answer to the above question is yes, do courts in the country you are reporting about permit cedents to aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

45

If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 and aggregating claims.

N/A

As there is no general prohibition for aggregating claims, it is therefore determined by the interpretation of the insurance policy wording.

Property damage

Yes/ No/ N/A

Additional comments, if any.

46

Have courts in the country you are reporting on issued jurisprudence concerning whether losses arising from Covid-19 qualify as property damage losses? Please give a short description of the legal basis.

No

No. However, extended epidemic coverages under property damage and business interruption policies have been examined in the courts, see Question 21.

47

Has the highest court in the country you are reporting about issued judicial opinions or guidance concerning whether losses arising from Covid-19 qualify as property damage losses? Please give a short description of the conclusions in such judicial opinions or guidance.

No

48

If the answer to the question above is yes, did the highest court in the country you are reporting about determine whether losses arising from Covid-19 qualify as property damage losses? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

49

If the highest court in the country you are reporting on has not issued such jurisprudence, have other courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether losses arising from Covid-19 constitute property damage? Please give a short description of the conclusions in such judicial opinions or guidance.

No

No. However, the interpretation of a ‘public authority measure’ due to Covid-19 has been interpreted consistently, see Question 21.

50

If the answer to the above question is yes, do courts in the country you are reporting about permit insureds to aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

51

If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 and property damage.

No

Exclusions

Yes/ No/ N/A

Additional comments, if any.

52

Has Covid-19 been deemed a ‘natural peril’ in the country you are reporting on? Please give a short description of the legal basis and relevant jurisprudence.

No

53

Has Covid-19 been deemed force majeure in the country you are reporting on? Please give a short description of the legal basis and relevant jurisprudence.

No

There is currently no case law confirming that Covid-19 is to be included in a general definition of force majeure. However, this has been claimed by several parties in order to opt out of contracts during the pandemic. The validity of such claims has not yet been tried by a Swedish court.

In Swedish contract law, force majeure is not regulated by statutory law and is instead regulated in the applicable agreement. In addition, grounds for force majeure are normally exemplified in the applicable agreement and usually interpreted narrowly, the examples in the applicable clause being usually exhaustive. It is therefore difficult to provide a clear answer, as every individual case will be different.

54

Is Covid-19 acknowledged as a notifiable disease in the country you are reporting on? Please give a short description of the legal basis and relevant jurisprudence.

Covid-19 is a notifiable disease according to the Swedish Communicable Diseases Act and the Swedish Communicable Diseases Regulation. Medical personnel who detect Covid-19 are required to notify the regional infectious diseases doctor and Sweden’s Public Health Agency.

55

Is it common for insurance policies issued in the country you are reporting on to include a pandemic or virus exclusion? Please give a short description of the legal basis and common insurance practice.

Under the SICA, insurers are allowed to construct insurance products relatively freely and are generally allowed to insure risks as per their own commercial risk appetite. There are, however, certain limitations, for example, minimum time limitations for notifying claims. However, exclusions for pandemic and/or virus are not prohibited, and insurers may include pandemic and/or virus exclusions in their insurance products.

The Swedish insurance market is, like the rest of the world, adapting to a new normal following the Covid-19 pandemic. Standard practices regarding imposing pandemic and/or virus exclusions vary depending on the insurance product, customer segment and industry, as well as each insurer’s individual risk appetite. Developments in the Swedish insurance market seems to indicate that insurers are imposing more virus and pandemic exclusions now than before the pandemic.

56

Have any courts in the country you are reporting on determined that a pandemic or virus exclusion is void as against public policy in the context of Covid-19? Please give a short description of the legal basis and relevant jurisprudence.

No

57

Have any courts in the country you are reporting on otherwise determined that a pandemic or virus exclusion is unenforceable in response to Covid-19? Please give a short description of the legal basis and relevant jurisprudence.

No

58

If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 in the context of exclusions.

No

Regulatory oversight

Yes/ No/ N/A

Additional comments, if any.

59

Have insurance regulators in the country you are reporting on issued directives concerning coverage for claims arising out of Covid-19? Please describe the regulations that have been implemented.

No

60

Are regulators requiring or encouraging insurers to provide grace periods to insureds to make payments on premiums? If yes, please give a short description of the legal basis and relevant guidance.

No

Government action

Yes/ No/ N/A

Additional comments, if any.

61

Has the government in the country you are reporting on implemented relief measures for losses sustained as a result of Covid-19?

Yes

62

If the answer to the above question is yes, are the relief measures available to both individuals and businesses?

Yes

63

Briefly describe the types of relief measures available to individuals and businesses.

N/A

Several different types of financial aid were issued for individuals and businesses. For businesses, state aid for sickness benefits and temporary waiving of qualifying period deduction for sick employees was made available, as well as temporary discounts for rental costs in vulnerable industries. A short-term furlough scheme was also made available, enabling employers to cut salary costs up to 50 per cent.

Several credit-related measures were undertaken, for example, the borrowing limit for Swedish export credit was increased and the Swedish Export Credit Commission’s credit guarantees extended. In addition, airlines were given government credit guarantees. The Swedish central bank planned to lend SEK500bn (approximately US$51bn) to Swedish banks to ensure lending to companies further down the credit line. In practice, SEK165bn was lent. The Swedish central bank also undertook quantitative easing and has plans to purchase a total of SEK700bn in financial instruments up until 31 December 2021. Lending to small and medium-sized businesses was increased via a state-owned lender.

The Swedish Financial Supervisory Authority undertook several measures, for example, easing financial capital adequacy requirements for financial institutions.

Deferment of tax payments was issued regarding deducted preliminary tax on salary, value-added tax (VAT) and employer contributions. In addition, increased allocation to accrual fund was issued, as well as temporarily reduced employer contributions and deductions.

For individuals, disease carrier’s benefit was introduced. This was for if an individual is unable to work because of infection or suspected infection of a disease that is deemed a public health hazard, that individual may be entitled to disease carrier’s benefit as well as to reimbursement for travel required in connection with medical examinations. Unemployment insurance funds were also reinforced. Furthermore, the above-mentioned short-term furlough scheme, which enabled employers to cut salary costs up to 50 per cent was extended, enabling employees to retain up to 90 per cent of their salary.