The Impact of the Financial Crisis on the Swiss Insurance Market
Swiss Insurance Association (SVV) President Erich Walser offered an optimistic outlook at a press conference early this year. Despite falling insurance company share prices, there are signs of resilience in Switzerland’s insurance industry.
Premium volume increased by approximately 0.5 percent (up 1.2 percentage points from the previous year) to CHF21.4 billion (EUR14.1 billion) in the property and casualty market and 2.3 percent (a gain of 1.5 percentage points) for the life insurance sector to CHF29.4 billion (EUR19.4 billion) a remarkable result for 2008. Motor insurance sector premium income remained at CHF5.3 billion (EUR3.5 billion) in Switzerland because of premium discounts. Walser warned that requirements for insurance cover may be reduced as a result of a cooling off economy this year — in addition to lower premiums as a result of falling values for the objects that are insured.
Insured losses from the recent earthquake in southern Italy provide something of a reminder to Swiss insurers. Though Swiss insurers usually do not cover earthquake losses, some do offer additional cover for household contents and movable and immovable property — though at a substantial deductible.
Currently, the SVV, Cantonal Fire Insurance Institutions, and the Federal Insurance Supervision Authority are working on a way to provide earthquake protection in addition to the existing elementary loss cover. At the same time, the Swiss Federal Council should take care of enacting of up-to-date regulations for the construction of new buildings, particularly given the earthquake risk in Basel and Valais.
Revision of the Insurance Contract Act
The Swiss Federal Council has proposed a new version of the Insurance Contract Act for comments. A first partial revision of the Act pertaining to urgent consumer protection requirements was enacted in 2006. A total revision of the hundred-year-old Act should strike a balance between the rights and duties between insurers and the insureds. An important new feature will be the right of revocation with regard to the conclusion, modification, or extension of insurance contracts within a period of two weeks. The right of revocation already applies with regard to an insurance period of one month. Also new will be the ability to complete an insurance contract retroactively, as long as neither the insurer nor the insured knows of a covered loss that has already occurred.
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