International perspectives on solvency modernisation: Switzerland

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Switzerland

New development

The Swiss Solvency Test (SST) is an economic-based regulatory approach that takes an all-risks view of the re/insurer’s business. It came into effect in 2006, being mandatory for all companies by 1 January 2011.

Scope of regulation

It applies to all Swiss-based companies. It obliges groups, conglomerates and reinsurers to use an internal model to calculate their solvency requirements. Additionally, groups and conglomerates must report their available and required capital twice a year to the Swiss regulator FINMA.

Similarity with Solvency II

At the highest level, the basic concepts of SST and Solvency II are similar. The Swiss regime is also based on a three-pillar approach that includes quantitative and qualitative risk management requirements; both value assets and liabilities on a market consistent basis; both take an all-risks approach and acknowledge the benefits of diversification that reinsurance provides.

Published 10 October 2011


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