Pan­dem­ic risks must be borne and man­aged in a col­lab­o­ra­tive man­ner

Accumulation risk represents a special challenge for society because it cannot be insured by private insurers alone. During a pandemic, a large number of loss events occur at the same time across the globe. The risk cannot be diversified as it can with natural disasters, which undermines a central insurance principle. The individual insurance lines were affected to different degrees during the coronavirus pandemic: business interruption, travel, legal protection and credit insurance were particularly hard hit, while the volume of claims in the accident insurance business, for example, fell due to the official lockdowns imposed in spring 2020. Although the number of claims in the motor vehicle insurance segment fell temporarily during the same period, they rebounded to their multi-year average since many customers switched from public transport to private cars.
 

Seamless service thanks to the digitalised workplace

«Thanks to its sustainable business model and the solid capital resources of the companies in it, the Swiss insurance industry contributed to economic and social resilience during the coronavirus crisis,» said Rolf Dörig, President of the Swiss Insurance Association (SIA), at the industry association’s annual press conference. «With claims payments of around CHF 1 billion, the insurance industry contributed to the stability of the Swiss economy.» In addition, Swiss-based reinsurers set up reserves worth, or paid out, more than CHF 4 billion for pandemic-related claims worldwide in 2020. This equates to over 10 per cent of the estimated global total insured loss. Furthermore, private insurers met their obligations at all times during the lockdown and paid an average of around CHF 140 million a day in claims and pensions. «This system worked as well as it did due to the advanced level of digitalisation in the insurance workplace,» says Severin Moser, member of the Board of Directors of SIA and CEO of Allianz Suisse. As a result, headcount in the insurance sector remained stable, even during the coronavirus crisis. Private insurers also retained their apprentices where possible and even increased the number of apprenticeship places in some cases.

The past year has provided a forceful reminder not only to society, but to the insurance industry as well that large and accumulation risks cannot be insured by private insurers alone. A collaborative approach between insurers and government must be taken in order to be able to cope as a society with the next pandemic and any associated government-imposed lockdown. Insurance companies and the government already work together successfully to prevent large risks, such as natural hazards and cyber risks. Earthquakes and global cyberattacks are other risks for which there is as yet inadequate protection: «A joint effort by business leaders, the federal government and private insurers will also be needed over the next several years in order to manage the effects of earthquakes and large-scale cyberattacks,» says Juan Beer, a member of SIA’s Board of Directors.

Pandemic insurance: private insurers are ready

The coronavirus crisis has prompted Swiss private insurers to find a solution that would cushion the effects of a future pandemic. A working group comprising representatives of the federal administration and private insurance companies has developed several possible solutions at the request of the Federal Department of Finance (FDF). These proposals are now under review by the government. The focus is on an insurance solution with state-backed reinsurance. Private insurance companies would assume a portion of the claims burden and the state would assume the rest. «Our contribution focuses mainly on our expertise, our infrastructure and our customer relationships – this is particularly important for efficient claims settlement,» says Juan Beer. This approach would also enable eligibility to be specifically determined using private insurers’ established mechanisms. «An insurance solution of this type will create transparency, predictability and legal certainty,» says the CEO of Zurich Switzerland.

Stress test for the healthcare system

The coronavirus crisis also represents an extraordinary strain on the healthcare system. Awareness of the importance of a solid financial foundation has grown in these turbulent times: «Due to the system, the health insurers are debt-free and solidly positioned. For the additional costs incurred during the coronavirus pandemic, we can fall back on the reserves that we have accumulated for precisely such scenarios. We are in a position to reimburse the medical expenses of our policyholders at all times thanks to these reserves,» emphasises Philomena Colatrella, member of the Board of Directors of SIA and CEO of CSS Insurance. However, the medium to long-term consequences of the pandemic, such as the costs to treat the long-term effects of Covid-19, are still unclear. «The coronavirus has medical characteristics that require different prevention measures than, say, influenza. Vaccinations are the best measure against the virus – and prevention remains the top priority,» says Dr Thomas D. Szucs, a member of SIA’s Board of Directors and Chairman of the Helsana Group.

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 employing a workforce of 46,000 people in Switzerland. Overall, the member companies of the SIA account for around 85 per cent of insurance premiums generated in the Swiss market. This makes the insurance industry and, as a result, the SIA a major force in the Swiss economy. Private insurers are therefore committed to the successful development of the areas they operate in, both in business and in social and political terms, meaning that they assume economic responsibility.

Media contact
Swiss Insurance Association SIA
Sabine Alder, media spokesperson
Phone: +41 44 208 28 20
Email: sabine [dot] aldersvv [dot] ch
Head office phone: +41 44 208 28 28