Switzerland’s financial center is in the midst of a power shift.
The Alpine country’s less fashionable insurers, long overshadowed by glamorous private banks around Zurich’s posh Paradeplatz and Lake Geneva, are on course to surpass banks as a bigger contributor to the Swiss economy for the first time since 1993.
Insurance will overtake financial services as a proportion of Switzerland’s 650 billion Swiss franc ($649 billion) economy in 2018 based on the average growth rate of the past decade, according to Reuters calculations.
It underscores banks’ waning power in the aftermath of the financial crisis as well as the damaging impact of a global crackdown on tax evasion, which has eroded the importance of Switzerland’s bank secrecy laws.
The swing could be temporary, according to Martin Eling, an insurance management professor at the University of St. Gallen.
“In general the business models of banks are simply more volatile than insurers,” said Eling. “Depending on the development, it could be that banks catch up again in the next three to four years.”
Switzerland is home to UBS and Credit Suisse as well as Zurich Insurance and Swiss Re , respectively two of Europe’s biggest banks and insurers.
The Swiss statistics office defines financial services as including areas like banking, trusts and financial leasing.
The number of banks and insurers in Switzerland shrank by around 20 percent between 2005 and 2015 but when it comes to staff sizes, banks remain clearly on top.
($1 = 1.0017 Swiss francs)
(Additional reporting by Paul Arnold.)
[Editor’s note: The trends described in the article are based on figures compiled by the State Secretariat for International Financial Matters SIF, which breaks down Switzerland’s financial center into financial services (banking) and insurance services. The full April 2017 document can be obtained via the Swiss SIF website.]