Despite its highly demanding environment, the Swiss insurance industry successfully managed to hold its ground in 2015. Non-life premium volume was higher year on year. In life insurance, premium volume has stagnated due to the continuing record low in interest rates.
Zurich, 03 February 2016 – The Swiss insurers accounts for over 43% of Switzerland's financial industry. It ranks among the top ten Swiss industries and creates value of some 26.1 billion of Swiss francs. This translates into a 4.2% share in the overall economy. Despite the demanding market climate, the Swiss private insurer held their ground successfully in 2015. Persistently low interest rates and increasing regulation were the main drivers in the year under review. Payments for insured losses were slightly below average in Switzerland.
Slight growth in non-life insurance
After stagnating in 2014, premium income appears to have grown by 0.5% in 2015 according to the SIA's extrapolations. In motor-vehicle insurance, premium income grew by 1.2% mainly through new car registrations. In the fire, natural disaster and non-life insurance segments, premium income grew by 1.3%, driven by construction investment, demographic trends and changes in purchasing power.
Continuous upward trend in group life insurance – slight decline in individual life
In life insurance, the SIA expects premium volume to stagnate. As demand for the full insurance model in occupational pensions (i.e. the guarantees given by the private insurers) continues, the 2015 premium volume has grown accordingly by 0.7%. On the other hand, individual life insurance registered a premium decrease of 2.2%. Due to the historic low in interest rates life insurers find it hard to issue attractive interest rate guarantees for new life insurance contracts. The ever-increasing costs of regulation constitute an additional hurdle.
Finding the right measure in regulation – not least in the customers' interest
«We have our customers' best interests at heart. Insurance-specific legislation already protects customers to a very large extent. Moreover, voluntary efforts have been made to bridge gaps in customer protection. It goes without saying that we are willing to contribute, if other gaps need to be closed», says SIA chairman Urs Berger. «However, regulation should neither interfere with our capacity for innovation nor with our competitiveness – both are also in our customers' best interest.»
This also goes for regulatory issues between Switzerland and the EU. Despite the EU having recognised the equivalence of Swiss insurance supervision, Swiss insurers still have to meet higher capital adequacy requirements under the Swiss Solvency Test (SST) than their European equivalents under Solvency II. This should be rectified as it distorts competition.
The pension system is in urgent need of reform
Demographic change is another major challenge for insurers, hence their calling for an urgent reform of the pension system in order to ensure a sustainably-financed system at the current level of benefits. For SMEs, the full-insurance system is indispensable. Therefore it should not be compromised.