Zurich Insurance chief says low interest rates threaten industry

THE chief executive of Zurich Insurance has told City A.M. that low interest rates threaten the business model used by the entire the insurance industry.

Martin Senn, the global boss of one of the world’s biggest insurers, said poor returns on fixed-rate investments such as bonds are damaging the market: “If you told me these interest levels are going to persist for the next 20 years then that would be a very big challenge for the industry which has a dependency on these products.

“It’s a problem that just drags on and is fundamentally not being resolved,” he said in an interview.

Senn also said EU officials must implement delayed industry reforms – known as Solvency II – as soon as possible or face the risk of “regulatory fragmentation”.

“The plan would be to have one regime for all European insurance companies. If you do not have that, there is the risk that national regulators start implementing their own regimes,” he said.

Senn also insisted that his company suffered more during the dotcom crash than the recent financial crisis and gave his backing to UK government plans to clamp down on dubious whiplash claims.