The Swiss secret: why reinsurers come to Switzerland

It’s unique blend of access to global re/insurance markets, a favourable regulatory environment and a wealth of general business advantages, such as a highly skilled workforce and productivity levels, makes Switzerland an attractive location for the global re/insurance industry.

That was the view of Eduard Held (pictured), managing director - natural hazards pool & head of non-life and reinsurance at the Swiss Insurance Association (SIA), who shared insights into Switzerland’s reinsurance landscape and its overall appeal as a re/insurance business hub.

He was speaking at Intelligent Insurer’s Re/insurance Outlook Europe 2023 conference taking place in Zurich this week (June 19-20).

Switzerland has established itself as the third largest reinsurance hub globally, trailing only the US and Germany and outpacing other key players like Bermuda and the UK. According to the Swiss Insurance Association’s statistics, the Swiss re/insurance market accounts for a robust 14% of the global regional premiums, with nearly Sfr46 billion in gross premiums. The country is home to 45 active reinsurance entities, including 22 licensed reinsurers and 23 branches of foreign reinsurers, and employing around 4,000 professionals.

The surprise element, Held revealed, is the outsized contribution of reinsurance companies, which account for a striking 80% of the “value creation” with a mere 3% of the workforce.

“Productivity from the reinsurance industry is significantly higher than the primary insurance industry,” he explained. “The reinsurance companies have contributed seven times more per workforce compared to the insurance companies and even 20 times more compared to the overall economy.”

He emphasised the competitive edge of Switzerland lies in the unrestricted “access to open reinsurance markets worldwide and the ease with which re/insurance companies in Switzerland can conduct business with other markets and services and products in other markets.

“There is no different treatment for local players compared to Swiss reinsurance companies,” Held claimed, highlighting the “ease and openness” with which Swiss reinsurance companies can establish subsidiaries abroad, fully owned by Swiss entities, without facing any restrictions or disadvantages compared to local firms.

He also noted the regulator’s role in forging bilateral agreements in case of market barriers and highlighted the Global Reinsurance Forum’s pivotal function in systematically resolving issues obstructing a free, open market.

In addition to a well-structured regulatory and supervisory environment that supports business growth and diversification, Held pointed out that Switzerland’s appeal encompasses the abundance of specialists in the Swiss market, the national stability, high quality of life, and a favourable tax environment.

Held also noted that Switzerland has maintained a steady focus on flood prevention measures over the last 10 to 20 years, an investment that has considerably “reduced both economic and insurance losses”. He said, many reinsurers have recognised the benefits of these preventive measures, with a majority participating in the risk pool.

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