The Covid-19 pandemic resulted in a challenging year for Swiss private insurers. In this extraordinary year, the insurance industry paid out an estimated total of CHF 1 billion in claims to policyholders in Switzerland in the context of losses related to Covid-19. In the non-life business, premium development continued on the slight growth trajectory witnessed over the past years. Life insurance business, on the other hand, declined as a result of AXA’s withdrawal from OPA comprehensive insurance.
Direct insurers made claims payments totalling about CHF 1 billion to companies and private individuals in Switzerland alone as a result of the pandemic. This figure is based on estimates by the Swiss Insurance Association (SIA). The bulk of payments were made under business interruption insurance policies, with substantial claims also made under travel, legal and credit insurance. These claims payments forced private insurers to report lower profits in the first half of 2020. ‘The Covid-19 pandemic made 2020 an extremely challenging year for Swiss private insurers,’ says Thomas Helbling, director of the SIA. 'Given the extraordinary circumstances, we can nevertheless be satisfied with how the insurance industry has developed. Thanks to its sustainable business model and solid capital resources, it contributes to economic and social stability in our country – even during a pandemic.'
Slight premium growth in the non-life business
According to projections by the SIA, the non-life business, including supplementary accident and health insurance, recorded year-on-year growth of 1.4 per cent in 2020. As a result, premium development remains on the steady slight growth trajectory seen over the past few years.
- +3.1 per cent in fire, natural hazard and property damage insurance. Due to the economic growth witnessed over the last few years, insured values also increased in 2020, which in turn contributes to an increase in the premium volume.
- +2.0 per cent for other forms of property insurance. These include legal expenses, credit and surety insurance. After demand dipped due to the lockdown imposed in response to the Covid-19 pandemic in the first half of 2020, the losses were made good in the second half of the year.
- +2.0 per cent in personal insurance as a result of rising healthcare costs and a steady increase in demand.
- 0 per cent in professional and general liability insurance. In recent years, premium revenue has remained almost unchanged.
- -0.5 per cent in motor vehicle insurance. Although the premium volume for comprehensive insurance increased slightly, more muted demand and lower tariffs for motor vehicle liability insurance led to a slight drop in premium revenue.
Premiums down in the life insurance business
The SIA expects a premium decline in the life insurance business of -17.7 per cent year-on-year. This is due mainly to AXA’s withdrawal from comprehensive insurance in the group life segment with effect from the beginning of 2019. In contrast to 2019, periodic premiums, which were significantly lower for this reason, were no longer offset by extraordinarily high single premiums from policy transfers in 2020. In addition, sustained low interest rates and high regulatory requirements are having a negative impact on the life insurance business.
- -23.2 per cent in group life insurance. Although AXA’s withdrawal from the comprehensive insurance business in 2019 was reflected initially in much lower periodic premiums, the company’s realignment had an impact on single premiums in 2020, which declined sharply as expected. However, income from periodic premiums declined only slightly against the previous year. Both periodic premiums and single premiums are expected to stabilise at this level.
- -0.4 per cent in individual life insurance. The premium volume remained virtually unchanged compared with the previous year. Unit-linked life insurance recorded particularly strong growth in a year-on-year comparison. These are solutions in which the customer shares the investment risk, but also benefits from higher returns if the stock markets show favourable development. Conventional life insurance policies, on the other hand, remain unattractive due to the continued low interest rates.
Better conditions in the reinsurance business
The policy renewals concluded recently and during 2020 allow a positive market outlook on the basis of experience in the reinsurance sector. The uncertainty surrounding claims development in connection with the Covid-19 pandemic has since subsided – and contractual conditions have improved in the main insurance lines. The SIA also expects the demand for reinsurance to increase in the coming years due to changes in risk appetite. The complexity of the reinsurance business means that it is impossible to arrive at any quantitative assessment of the development in premium volume for the past year at this early stage.
Note to editors
The Swiss Insurance Association (SIA) represents the interests of the private insurance industry at national and international level. The association comprises around 70 primary insurers and reinsurers, which together employ 46,000 people in Switzerland. The member companies of the SIA account for more than 85% of premiums generated in the Swiss market. As a major force in the Swiss economy, the insurance industry assumes economic responsibility at a business, social and political level wherever key success factors of its locations are at stake.
Swiss Insurance Association SIA, Sabine Alder, Tel +41 44 208 28 20, sabine [dot] aldersvv [dot] ch, Head Office +41 44 208 28 28.