The Swiss in­sur­ance in­dus­try achieves sol­id growth once again

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The Swiss private insurance industry can look back on a successful year in 2013: despite challenging framework conditions and persistently low interest rates, the insurance sector continues to grow and has produced another gratifying performance. There was steady growth in the non-life segment, in line with the trend of recent years. In group life insurance, there was a marked rise in demand for the full insurance model offered by life insurers. Switzerland needs a regulatory strategy in order to meet the regulatory challenges.

Zurich, 7 February 2014 – The Swiss private insurance companies have had a successful year: in 2013 they were again able to keep premium growth stable while performing strongly and effectively, thanks to solid financial results overall, an average loss experience and improved cost efficiency. «The private insurers have again contributed to Switzerland's prosperity in their capacity as a driving force of the Swiss economy. With gross value creation of CHF 20 billion, equivalent to a 4% share of the entire economy, the Swiss insurance companies form one of the eight most important industries in the country. In terms of productivity they actually come top,» says Urs Berger, Chairman of the Swiss Insurance Industry (SIA).

Steady growth in non-life insurance being maintained

Premium income for non-life insurance increased overall in 2013: for the year as a whole, and across all companies and business segments, premium volumes are expected to have grown by around 1.6%. This growth rate is similar to the figures recorded in recent years, and is only slightly below the growth in gross domestic product.

The high-volume motor insurance and fire insurance segments made a particularly good contribution to overall growth. Premium volumes for motor insurance rose by 2.1%. The continuing brisk pace of residential construction and renovation activity no doubt helped generate the 2% growth achieved by the fire, natural disaster and non-life insurance segments.

There was a small (1%) increase in premium volumes for health and accident insurance. Premium income in the supplementary health insurance segment contributed here, thanks to an estimated rise of 1.8%. As in recent years, accident insurance showed a decline: the fall of 1.3% resulted from tariff liberalization and increased competition, as well as the decline in disability insurance cases.

Demand for group life insurance remains high

Despite persistently low interest rates and a challenging regulatory environment, the SIA is expecting substantial growth of 5.4% in the life insurance business as a whole.

This positive result is mainly attributable to the group life insurance business, where premium income is expected to have grown by 7.9% last year. The significant 12% growth in single premiums reflects continuing strong demand for the unique security features of the full insurance model, which only the private insurance companies offer. This economic reality should not be forgotten during the upcoming political debate about the «Pension System 2020» reform package. A higher proportion of people in work, together with salary increases, led to growth of 2.6% in regular premiums.

Premium volumes for individual life policies fell again, as in previous years. A loss of 1.2% is expected for 2013. Whereas regular premiums remained fairly steady, falling by just 0.1%, income from single premiums declined by 3.8%. In order to reverse this trend and boost the attractiveness of single-premium individual life policies again, the SIA has for some years been calling for the abolition of the 2.5% stamp duty on these products.

Switzerland needs a regulatory strategy

Thanks to their good results and the current economic outlook, the insurers are facing the future with optimism. «However, the regulatory environment presents big challenges for us, and this gives cause for concern,» says SIA Chairman Urs Berger. «A wide variety of requirements in different fields such as taxation, consumer protection, financial stability, supervision law or even gender issues are leading to numerous and sometimes uncoordinated regulations from various official bodies. This results in inefficiencies and constraints which harm our innovative ability and competitiveness. To prevent this, Switzerland needs a regulatory strategy that defines clear objectives and practical regulatory principles.»

Dialogue with the supervisory authority must be pursued

In the wake of the increase in regulation since the financial crisis of 2008, the supervisory authority has done much to increase the security of the insurance companies, thus also improving consumer protection. At the end of 2012, the allowable equity capital of all the Swiss insurance companies amounted to over CHF 90 billion, with a combined balance sheet total of just under CHF 600 billion. According to the Swiss Solvency Test (SST), the industry achieved coverage of 190% – almost double the intervention threshold. However, it is now time to make adaptations in relation to the international environment, too. Here, the focus is on equivalence and mutual recognition by supervisory authorities at international level, so that the Swiss insurers are not at a competitive disadvantage internationally. If this goal is to be achieved, the ongoing dialogue between the supervisory authority and the insurers must continue to be fostered.