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2018 Country Focus: Switzerland

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Although smaller in size and with a feeble penetration rate, the Swiss credit insurance market is more diversified than many other countries, with no clear market dominance of any of the main credit insurers. That said however, the largest power shift in the market in the last couple of years has been between Lloyd’s and Axa Winterthur with the former growing from 12% to 19% market share and the latter shrinking from 18% to 11% since 2014

 

Macro-economical environment

Main Indicators

Top Commercial Activities

GDP Growth

  • 2016 – 1,3%
  • 2017 – 1,0%
  • 2018 – 2,0%- forecast

Population: 8,3 millions
Unemployment Rate: 3,2 %

  1. Commodity trading
  2. Pharmaceuticals
  3. Luxury goods
  4. Precision Engineering

 

 

Strengths

  • Political, economic and social consensus and stability
  • Low unemployment and diversified workforce
  • Balanced public accounts
  • External position largely as a creditor

Weaknesses

  • Over valuation of Swiss franc
  • High price of property and therefore of household debt
  • Highly concentrated banking sector
  • Aging demographic compensated by immigration

Trade structure

Top 5 countries of exports

  • Euro area (35%)
  • USA (12%)
  • UK (11%)
  • China (9%)
  • Hong-Kong (6%)

Top 5 countries of imports

  • Euro area (46%)
  • USA (9%)
  • UK (7%)
  • UAE (6%)
  • China (5%)

What's new?

An increased client interest in alternative financing methods such as factoring and securitization present an opportunity for intermediaries who can combine those financial products with the credit insurance components in order to provide turnkey solutions.

Trade Credit Insurance

Credit Insurance Market

  • Focused on single risk and single buyer policies
  • Diversified list of players without clear domination of anyone

Available products

  • Single Risk
  • Excess of loss
  • Ground-up
  • Medium-Term

Insolvencies

  • Number and increase of insolvencies: 4 709 (+3,7% vs. 2016)
  • Average Day Sales Out (DSO): 53 days

Main Credit Insurance Players and ranking

  • 19% Lloyd’s

  • 18% Atradius

  • 17% Euler Hermes

  • 46% Other

The credit insurance market represents 180mEUR in 2017, steady decline over the course of the last couple of years. This was mainly due to the drops in commodity process which lead to significant decreases in commodity traders which form a large portion of clients. This trend was reversed in 2017 with price increases resulting from the 105.9% loss ratio of the previous year bringing the premium level up to a similar level as 2014.

Main Bonding Players and ranking

  • 31% Swiss Caution

  • 17% Axa Winterthur

  • 8% Allianz

  • 43% Other

The bonding market represents 152mEUR in 2017, an increase of 29% over the last 4 years. Rental deposit insurance forms the largest chunk of the bonding market, with the country’s leading insurance company for this product, Swiss Caution, offering only rental guarantees. Rental deposit insurances are closely followed by construction guarantees.

All the written material is the property of Qualibroker, this article has been written by Emre Karaca.