Swiss Quarterly Update Q1 2016

Last year was dominated by M&A with some surprising deals. The general thought was “the bigger, the better” and the main conversation topic of the last quarter was speculation about who would be the next to either buy or be bought.

So what is happening next? What will be the theme for 2016?

After a bleak start in Q1 where the newly merged buddies began to integrate, see where they overlap and where they lack, where the Underwriters typed up their less than positive renewals reports and Brokers tried to figure out their relevance, how can we survive the rest of this year? The answer from the industry seems to be two-fold: Cost-cutting and client relationships.

Salaries, being the major cost pot in Switzerland had a very high ceiling. There was fierce competition for talent in a period where the market saw new reinsurers entering and establishing roots and a “risk premium” being paid to new joiners. Actuaries were in a luxury position where they did not have to job hunt and could be selective about their next career step.

This ended on 1st January 2016. HR Managers of the various insurance firms now have a clear and transparent benchmark on how much to pay their talent. Salaries are levelling out across the market and frankly becoming fairer. High performers still have the advantage of being rewarded with higher bonuses than their peers and even getting share options on a discretionary basis. In general terms, I believe it has brought some much needed calmness to a market being battered by large pay differences between its various players.

An additional struggle in the market is the strong Swiss Franc compared to other European currencies. With many insurers receiving premium income in Euros or Dollars, their Swiss offices have suddenly become very expensive. A number of them are outsourcing services such as IT Security, Data Analytics and Modelling functions abroad to Slovakia, India, Spain or even Germany. However, the front office and higher level technical roles are remaining in Switzerland.

Who is benefitting?

Quite simply, the end-client, whether it is the direct insurer or the corporate. The European model of pampering and looking after the client even seems to be making its way into the transaction focused London market. Underwriters have to become well versed in more than one line of business and spend more time in front of the client than at their desk. Reinsurers are trying to evade the Broker and speak to their client directly. Re/insurers, brokers and technical specialists are starting to work together to develop products that will help close the insurance gap.

Actuaries, Nat Cat Modellers and Underwriters are working more closely together to meet the specific needs of the clients. Risk Managers are in high demand, not just due to the regulatory pressure of Solvency II, but also because Insurers are trying to get a better grip of their own exposure management.

All in all, the insurance sector is moving and finally seems to be reacting to what is happening globally. If we are ready to change our mind set and adapt our skill set, it could be an exciting rest of 2016 for the market.

If you're interested in new roles within the Swiss market, contact Audrey Dadon, Manager, Switzerland - Tel CH: +41 43 508 0444 UK: +44 207 310 8647