Why the insurance sector has grown in Switzerland

Katja, tell us, what does your role as General Counsel entail? And what drew you to this position?

Many thanks for having me here. My role as General Counsel at Zurich is, of course, to advise on legal topics. We have a team of around 700 members globally. Everybody is vertically integrated, so we are quite a huge team. We advise on legal topics, are responsible for corporate governance, and deal with regulatory affairs – with investigations and litigation. It’s a very broad function where a holistic approach is needed. I’m very happy to be here, working for an insurance company like Zurich.

In Switzerland, the banking sector has decreased, while the added value from the insurance sector has grown. What do you think: what were the key drivers behind this positive development?

I think one of the key drivers is the history of Switzerland being a global leading financial center. Additionally, Zurich as a company can look back on more than 150 years of existence, so I think this history gives us the basis for being a stable and reliable country and company. And for me, that’s one of the key drivers of the current success of Switzerland and also of Zurich. Being a lawyer, I think it’s also very important to point to the legal environment in Switzerland: We have, more or less, a principle-based approach to regulation and law, so this allows us to apply a holistic and more agile approach instead of if everything was very detailed – detailed laws, detailed regulation. Because if it’s too detailed, it makes it very burdensome for companies – also from an administrative perspective. So I think it’s the history, the legal and regulatory environment we have in Switzerland, and then it’s also the excellent workforce, the highly skilled employees which we have in Switzerland. From my perspective, this provides a basis for success and is also very important for innovation in Switzerland. But the saying “what brought us here doesn’t necessarily bring us there” also applies to Switzerland and global companies. So we really need to focus on transformation, be ready to challenge ourselves, and to look a little bit at what our peers are doing. It’s a constant transformation, constantly thinking what can we do better – we cannot stand still. I think that’s also very important.

Absolutely. Now let’s talk a little bit about international requirements, because banks are subject to international capital requirements, such as Basel II and III, while the insurance sector doesn't have equivalent global standards. Now, as a multinational operating in around 200 countries, how does Zurich manage the risks associated with adhering to different rules in different countries?

For the insurance business, trust is something very important, and experience is something very important. So it’s really important that we have a stable regulatory environment and that we have knowledgeable supervisory authorities. I think that’s for each and every country really the basis for striving for success. And maybe being a global company also brings certain advantages because from my perspective, regulators all over the world focus on similar topics, but the pace at which they apply new laws and regulation may be different. So sometimes we see something in the States and then it comes to Europe or to APAC, or something in LATAM. And in general, I have to say, regulators focus on similar topics: capital requirements, customer protection, innovation, and new better products for customers. For the policy holders, it’s sustainability; it’s diversity. I think in this regard, being a global company also helps us to see where the trends and developments are going. Of course, in particular with the geopolitical environment, it’s also sometimes quite difficult because there are conflicting laws and regulations. So it’s not always easy, but I think we find our way through, and if we manage our internal network and our internal knowledge and experience in the right way, it can be a benefit. On the other hand, what I think is also very important is – and this is done very well in Switzerland – transparency if new laws and regulations come into force. In Switzerland, before the lawmaker or the regulator implements a new law, there is a draft and a consultation period where companies and people can give their view and say what they like and what they don’t like. But of course, then we also need to be heard, and we need to implement what companies want and what they want to achieve.

From what I’m hearing, would you say that Switzerland is business friendlier than other jurisdictions?

Yes, I think Switzerland is a business-friendly jurisdiction as said. It’s a stable jurisdiction. Laws and regulations provide the right background, and I think this is always visible because Switzerland is still one of the most innovative, if not the most innovative country, in the world. We have good education, as stated, we also have an open labor market, and I think this is something which is really important. That we get the right people – also from abroad – the right talents, that we are inspired, that we look outside of what is happening in Switzerland, and also really challenge ourselves through that. And I think it’s also very important that we don’t get complacent as a country, as a society and as companies because we live in very healthy, very stable surroundings. We need to be challenged to really get better, do better and not just stand still. So I think yes, at the moment, Switzerland is still business friendly, but we really need to ensure that this also continues in the future.

How so?

It’s important that we remain competitive, that we still focus on a good education, and that we don’t adopt laws that are too intrusive for companies. There are many areas, I think, where we need to be careful. Also, the understanding between companies, society and government, and our collaboration together, is really important. We need to listen more to each other and then take the necessary steps going forward. It’s also visible with geopolitical problems or with sustainability issues. I don’t think we can solve sustainability problems by ourselves. Not as a company, not as a government, not as a country. We really need to work together – everybody.

In June, Zurich announced the successful acquisition of a 70% stake in Kotak General Insurance, making Zurich the first insurer to enter India since the 2021 amendment of foreign direct investment rules, which now allow up to 74% foreign ownership in Indian companies. What implications does this change in regulatory requirements have for a future collaboration between Swiss and Indian companies?

We are happy about this transaction, and I also think it’s partially grounded in history, as we have always had very solid and friendly diplomatic relationships between Switzerland and India. Switzerland was one of the first countries who recognized India’s independence. We have also been one of the first countries which entered into a trade agreement with India, which allows both countries market access and legal certainty. And yes, absolutely, as you mentioned with this increase of the threshold for foreign investments in India from below 50% to 74%, this is just very good ground for us and a secure way for us to do business in India. And if we look at India, it will pretty soon become the world’s biggest economy. It has the largest working age population and the biggest middle class, so it’s also very attractive from an economic standpoint. We are very excited about this transaction and are very much looking forward to this long-term relationship. We think we can bring our long experience in general insurance to the table, and Kotak brings the local reach and experience as well. For us, it’s a long-term investment, and we are very happy and very much looking forward to how it’s going to develop.