Switzerland’s implementation of new solvency rules ahead of the European Union may reduce the appeal of Zurich as a base for reinsurers and insurers, the canton’s economy and labor office said.
Switzerland introduced stricter solvency rules known as SST in January 2011, requiring insurers to provide a mark-to-market valuation of assets and liabilities that for the first time takes into account their investments. Lobbying by German, British and French insurers has delayed this year’s planned implementation of the EU’s Solvency II rules that seek to align capital reserves with the risks companies take.
“The pre-drawn implementation of the SST in comparison to Solvency II may have a temporary competitive disadvantage and with that a reduction in attractiveness of the location,” the canton said in a study presented today in Zurich.
Zurich, home to Swiss Re Ltd. and Zurich Insurance Group AG, is concerned the rules threaten the role of insurers in creating a more diversified based for the canton’s bank-dominated financial industry. Record-low interest rates and a shortage of skilled workers provide other challenges to Zurich’s insurance industry, the canton said.