The insurance industry is looking back on a successful 2007. Despite above-average storm damage in the summer, insurers are in top shape. The industry saw premium growth of 1.2% in indemnity insurance. With the first growth in premiums since 2003, last year’s 1.5% increase has marked a turnaround in the life insurance sector.

Zurich, 22 January 2008 - The private insurance industry is in very good operational heath. Insurers were able to report good technical results in 2007, and the Swiss Insurance Association expects its member companies to post good to very good annual results over the next few months. Although the costs incurred by the storm damage in the summer were significantly less than in the record year of 2005, 2007 saw an above average number of claims. Despite this claims burden and despite turbulence on equity markets, the insurance sector continues to grow.

Turnaround in life insurance

Projections by the SIA show that following three years of continued decline in premiums, Swiss life insurance business (individual and group) is in the midst of a growth turnaround. Premium volume is likely to have grown by a total of 1.5% last year. Group life insurance business has exhibited growth of 1.5%, following a reduction of 1.2% in the previous year. Individual life insurance business has registered the biggest change: following a premium reduction of 3.4% in the previous year, growth now stands at 1.6%. The only force driving growth in individual life insurance in 2007 was unit-linked life insurance business. For unit-linked policies with single premiums, the SIA projects growth of 12.9% and for those with regular premiums, an increase of 9.1%. Premium volume for capital-sum insurance with single premiums is likely to have decreased by 5.2%. The introduction of the absurd stamp duty in 1998 is now showing its devastating effects during this period of low interest rates. The trend away from traditional endowment insurance towards unit-linked life insurance continues.

Moderate growth in indemnity insurance

With an estimated growth in premium volume of 1.2% overall, 2007 was a positive year for indemnity insurance business, even if this was a slightly lower growth rate than in the previous year. This slowing down of the growth rate for indemnity insurance is a result of intensified competitive pressures amongst insurers, particularly in motor insurance business. Many consumers were able to benefit from lower premiums last year.

Important legal reform for the insurance industry

The industry is busy with a whole range of legal projects. An important topic for the SIA in the coming year will be BVG occupational pension provision. For Erich Walser, Chairman of the SIA, another important issue is how parliament will handle the draft bill by the Federal Council for a quicker reduction in the conversion rate: “Now politicians must act: growing life expectancy together with interest rates that have been decreasing for several years now demand a speedy reduction in the conversion rate. A conversion rate that is too high will lead to an unfair redistribution of pension fund assets from the employed to pensioners.”

With regard to the amendment of the Accident Insurance Act (UVG), the Association is calling for liberalisation, a clear divide between the remit of private accident insurance and Suva, as well as clear restriction in the secondary activities of the state monopoly.

Following the rejection by both parliamentary chambers of the SVP popular initiative entitled “for lower compulsory health insurance premiums”, parliament has drawn up a direct counter proposal along similar lines: it calls for greater competition and transparency and a higher level of policyholder accountability in healthcare. The SIA supports this proposal.

The Insurance Contracts Act (VVG) Is currently undergoing a full revision. The VVG regulates the legal relationship between insurers and consumers, and is therefore of extreme importance to the insurance industry. The SIA is monitoring the formulation of the new VVG and making sure that the interests of the private insurance industry are being taken into account.

Policyholders have confidence in their insurance

According to a recent representative poll by DemoScope, 84% of respondents have (fairly) high confidence in their insurance company. The main reasons given for this were good experience with insurers, together with their expertise. Nevertheless, insurances companies do not have such a good image as employers, despite the fact that the insurance sector offers above-average working conditions. The SIA now wants to improve awareness of the advantages of being employed in the insurance industry. A step in this direction has already been taken: insurers have re-organised their advanced professional training offerings as part of a training offensive.