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Swiss insurance consumer report 2021
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Swiss insurance consumer report 2021 Buying habits in insurance
The Swiss insurance sector is in a healthy condition – for now: Switzerland can pride itself on its robust insurance sector with a high number of successful local and global insurance providers. The domestic market for personal insurance policies has been stable, with insurers capitalising extensively on their network of agents and brokers for sales. There has been only limited investment in digital technology, and although some alternative providers have entered the market with new product features and sales channels, they have not yet become a serious threat to the market incumbents. But there are indications that change is on the way and that disruption will come, just as it has in other industries such as banking. With the recent advances in digitalisation across the economy, customer expectations are evolving. The coronavirus pandemic has also challenged the efficacy of the agent networks for insurers, by restricting face-to-face interaction with customers. These twin developments are accelerating a major shift towards digitalisation, which may also lead to non-traditional insurers becoming a reality in the Swiss market sooner than many people anticipated. To find out more about how attitudes and behaviour may be changing, Deloitte conducted a survey of customers for personal insurance in Switzerland. We wanted to better understand how customers inform themselves about insurance products and reach their purchasing decisions. Additionally, we sought to gauge their satisfaction with the insurance market as it currently operates, and whether they might be open to change. If customer needs are changing, insurance companies must respond in order to remain relevant.
Implications for Swiss insurance providers The results of the survey were analysed, and we have derived five main implications for the Swiss insurance market. The entirety of our research including findings can be found in our research report. Download the executive summary 1. Help customers understand what they buy
Insurance companies and their agents have an opportunity to improve the quality of their customer service and experience for those seeking information about products and services to reach a buying decision. Customers want to be well informed about insurance products, and in general are not comfortable with purchasing only on trust. Many customers do not feel sufficiently informed or confident about their current insurance cover – especially for complex products. Our research indicates that there is a clear need for better advisory services from insurance providers, who need to recognise the gap that exists between customers’ desire to understand and their actual understanding. They need to look at both the quality and suitability of information, and how it is delivered to customers (for example through a direct advisory service, published knowledge content, advertising, and so on). Getting this right and giving customers a good level of understanding is a significant advantage in the purchasing process. Insurance is an ‘experience good’. Customers cannot fully assess the quality of any given insurance product before or even at the time of purchase. The most critical ‘moment of truth’ is after the point of purchase, when they make a claim and discover whether the cover provided by the policy is as good as they thought or find out how quickly and smoothly a claim can be settled. In this way, an insurance policy is not a ‘product’ but rather access to a commitment to deliver a future service. In practice this service is not always delivered, and customers have little personal experience themselves – they need to build trust through other means. Consequently, it is still up to providers and their agents to create a compelling customer experience and build trust through advice and during the purchasing process. One way of building trust is to deliver a great advisory experience. However, less than half feel the same way for complex products. Only 34% of respondents rate their level of understanding of complex products as ‘profound’ or ‘good’. Only 8% of survey respondents think that it is not important to better understand their insurance contracts.
Customers want to understand their policies The level of understanding is currently high for simple insurance policies, but lower for more complex products We asked our survey respondents about their attitude to insurance. The majority of respondents, across all age and income groups, want a better understanding of their insurance products and the risks they cover (89% for simple and 82% for complex products respectively, see Figure 5). We found that most individuals think that they are well informed about simple insurance products. The majority of respondents (87%) claim to have at least a fair understanding of their simple insurance policies, such as motor and house and contents insurance, and as many as 51% rate their understanding as good (see Figure 6). However, a third of respondents said that their knowledge and understanding of more complex insurance products, such as life assurance, was limited or poor (see Figure 6). This points to the possibility of a gap in the service that customers receive when they search for an insurance policy or decide whether to buy one. Figure 5: Do you think it is important for you to understand your insurance contracts better? Simple insurance
Complex insurance
Figure 6: How would you characterise your level of understanding of your insurance coverage?
2. Be present wherever your customers are
All distribution channels need to be served, particularly to cater to younger customers. While most customers still interact mainly with an agent or broker, increasing numbers of customers are also turning to other channels. It is important for insurance providers to understand which channels are used by key target customer groups, and what kind of information and sales service they need. For example, to help older customers, the focus may need to be on delivering ‘high touch’ options and giving extensive information about complex insurance products, whereas it might be more appropriate to provide easily accessible information about simple insurance (mainly online) to reach younger individuals, with less agent or broker interaction. Customers under the age of 30 interact differently, but not as much as one might think: Among our survey respondents below the age of 30, a range of different channels were used to source information and conduct purchases. There is a strong implication that the use of online or digital channels will continue to grow, a trend that can be seen in other countries (1). In the UK for example, customers make extensive use of independent online platforms known as ’aggregators’, which provide consolidated information across a range of insurance products from different providers so that individuals can make an informed choice. In China, where customers are more likely to share their personal data, apps with a personalised push approach are becoming more prevalent. However, increasing the number of channels and customer touchpoints inevitably adds to operational complexity, making it ever more important for insurance providers to make strategic decisions about their investments in processes, including customer journeys, and technologies. Customers younger than 30 years are up to 25% less likely to reach out to an agent or broker for information than those aged 65 or older. Against popular assumptions, this also holds true for customers below the age of 30 – the majority of which still prefer to buy in person.
Agents are the main source of information ...but younger generations reveal a changing pattern of search behaviour The market for personal insurance policies has not changed much over the years. The main method used by customers to obtain information about both simple and complex products is through a specialist such as an agent or broker. However many individuals rely instead on their own research for both simple products (34%) and complex ones (27%). They use the internet to do this (insurers’ web sites, aggregators, internet forums and social media etc). Some individuals, especially in the younger age group, ask family members or friends for advice (see Figure 7). Individuals aged between 18 and 49 years old are much more likely than older people to do their own research into insurance. Only a third of customers below 30 obtain information directly through an agent or broker, in direct contrast to those in the 65+ age group (Figure 7). Insurance can be difficult to understand, particularly the fine detail in insurance policies. It may therefore seem surprising that so many individuals feel the need to find out for themselves, rather than rely on expert advice. Interestingly, individuals with a large number of insurance policies are much less likely to do their own research into complex products than into simple policies, and they are more likely to seek advice from an agent or broker for complex products (see Figure 8) This may be because asking for advice calls for less effort when buying or renewing a large number of policies. Or it may be that individuals who buy extensive insurance recognise the need for expert help and advice with complex products where the benefits and the extent of cover may not seem clear. Figure 7: How did you mostly acquire your current level of understanding? (Participants with 1 or more insurance policies) Fig. 7a: Simple insurance Fig. 7b: Complex insurance Figure 8: How would you characterise your current level of understanding? (Participants with more than 8 insurance contracts)
3. Maximise the potential of agents and brokers
Agents are currently the dominant channel for sales and advisory, but results indicate they can be even better equipped to address customer needs more effectively. Agents and brokers are still key players in the sales and advisory process for new policies and products: In most cases the relationship between insurer and client continues to be via a salesperson, rather than directly with providers themselves or their brand. More costumers currently interact with agents and to a lesser extent with brokers than via any other channel, valuing the expertise provided. After pricing and product features, personal advice and relationships are the main concern for customers, where they are looking for trusted advisors, rather than simply an outlet for buying insurance policies. The approach of insurance providers should continue to expand the focus of their agents, incentivising them to provide risk advisory and personalised services, particularly for complex products, alongside their product sales activities. Digital channels are not yet mature enough to offer an alternative sales channel, but they can complement the agent experience: The sales process for insurance in Switzerland continues to be driven by personal contact. Especially when it comes to active outreaches – which only some customers would always welcome – our research shows that customers are more open to accepting offers pushed by an agent rather than by a digital application. However, we see that younger customers feel more comfortable in engaging with insurance matters through online channels compared to older generations. Insurers need to prepare for this shift. Firstly, it is important to improve their understanding of digital touchpoints along the customer journey. Secondly, providers also need to define a strategy that leverages the strength of their agents – expertise and trust building – in new ways, and most importantly digitally. Harnessing the advantages of digital technology should be a part of this. In fact, most respondents planning to buy insurance want to speak with a trained salesperson – even for simple insurance products, such as motor (93%), legal protection (87%) and home insurance (84%). Around one -third of customers under 30 see convenience as a value proposition for agents. Surprisingly, brand is consistently ranked as the least important aspect by Swiss customers.
Agents remain the dominant sales channel Our research found that there is a difference between the way that customers obtain information about insurance and how they actually buy it Although many policy holders do research online, only 1 in 5 purchase policies digitally. In general, preferences for sales channel vary by age group. Most individuals buy their insurance through a broker or directly from an insurance company, with some human contact, even if just by telephone (Figure 11). Only 11% of all respondents buy directly through an aggregator (see Figure 9). This suggests that customers may want the reassurance of buying insurance through trained experts, rather than relying entirely on their own judgement. There are differences in buying behaviour according to age and also the number of policies held. While older customers and individuals with a large number of policies tend to rely on an agent for buying, those in the 18-29 age bracket tend to buy more often through the insurance company’s central office or directly through an aggregator. This may indicate a lower level of confidence among younger individuals in the value of agents: if so, this is a potential problem that insurance companies may need to address. Figure 9: Who do you usually buy insurance from? Figure 10: Who do you usually buy insurance from? Simple insurance by number of contracts (multiple answers possible) Figure 11: In which ways do you usually buy insurance? Complex insurance by age group (multiple answers possible) The value proposition of agents is trust and expertise When buying insurance from agents, customers value trust and experience – even if it’s not necessarily seen as convenient We found that overwhelmingly individuals value interaction with a trained expert when buying insurance. 79% of our survey respondents rate trust as an important factor when buying insurance from an agent or broker, and 76% value their expertise (Figure 12). Even for simple products, individuals who are planning to buy insurance think it is important to have personal interaction with a trained sales agent, even if they do not place blind trust in the advice they are given (Figure 13). The perceived importance of personal interaction varies only slightly with the age of the individual. So individuals who do not ask agents or brokers for information about insurance policies nevertheless choose to buy insurance through them. Agents may not necessarily be providing the ‘best’ service, but the access to advice is something that customers value. This has implications for insurance companies and their selling strategies. Figure 12: When buying insurance from an agent / broker, what aspects are relevant to you? By age group (multiple answers possible) Figure 13: Customers indicating "It is important to understand my insurance contracts better because I don't want simply to trust other people's advice" Figure 14: Do you plan to buy one of the following insurance products? If so, how important is personal interaction with a trained salesperson for each of them?
4. Provide simple digital services as well
Insurance providers should start by meeting customers’ basic digital expectations and provide simple digital services as a matter of course, before offering more advanced digital features. Customers want ease and convenience first, before advanced digital capabilities: Customers for insurance products prioritise simple digital solutions globally, above more sophisticated digital capabilities (1). In fact, the overwhelming majority of Swiss customers rank an “easy to understand policy contract” as their number one priority when purchasing insurance digitally. Going forward, the expectation of digital services is likely to expand beyond product research, into the purchase, renewal and modification of existing contracts online. However, simply translating existing offline procedures into an online journey is unlikely to result in success, as this often leads to an overly complex process in the digital world. This, alongside the limited number of insurers offering fully digital sales, could be a reason why relatively few customers make online purchases. We find evidence of this in our data: while only 40% look for a personal interaction during the process of information gathering, over 60% still turn to an agent or broker to purchase insurance. Make simplicity a business imperative, because in today’s digitalised world a simple and usable digital experience is an important hygiene factor: Customers respond negatively if they do not get the service they expect. They do not compare rival products but rather the quality of their experience with service providers – and the insurance provider with the ‘least effort’ experience wins. The digital experience should aim at making the process of buying or renewing insurance policies feel smooth and trouble-free. When it comes to insurance, the best experience is often the one that is the most intuitive for the customer. Ideally clients should feel that they are being guided towards the best decisions for them, without having to invest much effort themselves. However, although it should be possible to buy simple insurance products easily online, this is not yet happening across the board. Often, there still is too much complexity in the information provided about products, and lengthy risk assessments, even for simple policies, and this limits the efficacy of the digital aids to selling. On average, digital capabilities are up to 20% more important for customers aged below 30 than customers who are 50 or older
Simplicity & convenience are key for digital channels Digital channels for obtaining information about insurance and buying policies are becoming more prevalent. We asked respondents who use digital channels what features they find particularly attractive. Their answer was simplicity and convenience. The overwhelming majority of customers who buy insurance online or via an app want easy-to-understand policies which they can renew or amend online (see Figure 15). For many (87%), the opportunity to purchase and activate a policy online is also important. More ‘advanced’ capabilities such as an ability to save a quote and pick it up at a later time, or to move between devices (for example between mobile and laptop) are less important. It is perhaps significant that even when they buy online, 80% of buyers online rate the ability to speak with a human advisor as important. This is much more than those (50%) who want the ability to chat with a “robo-advisor” (see Figure 15). Whereas the importance of chatting to a robo-advisor is valued more by younger customers, speaking with a human advisor is in consistently high demand among all age groups (Figure 16). The message appears to be that although digitalisation is making inroads into the insurance market, the ability to call on human expertise if needed is still a ‘must have’. Figure 15: When buying insurance online or through an app, how important are the following digital capabilities? Figure 16: When buying insurance online or through an app, how important is it to be able to chat with a human advisor? (Share of "important“ by age group) After price, insurers compete on quality and advice For many customers price remains the number one driver of purchase decisions, whereas brand is a very marginal factor  Price remains the number one driver for purchase decisions for both simple and complex insurance policies, aand insurance providers must expect to continue to compete in the market on price. In second place customers see attractive product features, with personal advice and customer experience ranked third and fourth respectively (see Figure 17). The rankings are consistent across all age and income groups, although customers with higher income tend to be less price-sensitive. Comprehensive digital capabilities are not a product differentiator. Customers do not compare the products themselves on the basis of the digital features of the service they receive, although respondents less than 30 years old say that digital claims handling (91%) and digital customer portals (89%) are important when selecting an insurance provider. However digital capabilities are an important hygiene factor when selecting an insurance provider. Even though digital capabilities rank only sixth in the list of drivers of insurance purchases, customers still want to have them: they improve the customer experience. So although they are not a reason why customers will decide to buy a particular insurance policy, customers may be deterred from using an agent or insurance provider, or may decide not to buy from one that does not offer the service they expect. Figure 17: How would you rank the importance of each aspect in relation to the others?
Simple insurance rank overall
Complex insurance rank overall
Price 1 1
Product features / services 2 2
Personal advice 3 3
Customer service 4 4
Ease of buying insurance 5 5
Digital / self-service capabilities 6 6
Social responsibility 6 6
Advice from friends, family members or colleagues 6 6
Online ratings 6 6
Marketing / brand 6 6
Figure 18: How important are the following digital capabilities when choosing an insurance provider? By age group (multiple answers possible)
Customers rarely change insurance provider A big question for insurance providers is how to win new business. Customers appear to remain with selected providers at renewal, potentially due to convenience or service quality provided Once on board, customers rarely move to another provider. Roughly one-third of respondents across all age and income groups (30%) simply renew their annual insurance policies without evaluating offerings from other insurance providers. . Only 16% on average would always evaluate other offerings when a policy is up for renewal, although 55% would do so if something significant has changed (see Figure 19). 21% say that they have never moved at all but have remained with the same provider since first buying their policy. The main driver for changing insurance provider is to get a ‘better deal’, but the hassle involved deters many customers from comparing contracts (Figure 21).  About 20% of customers say that they look at other providers if they are dissatisfied with their current provider or policy; and customer loyalty seems to be less among those with a large number of insurance policies (see Figure 20). So to win new business, options for insurance companies may be to offer better deals (on price or the nature of cover), attract dissatisfied customers from other providers, or encourage individuals to buy additional insurance. And perhaps above all else, insurers must make it an easy and trouble-free experience to switch. Figure 19: When a contract needs to be renewed, do you look at other providers? Figure 20: At renewal, how often do you actually change? By number of contracts held Figure 21: If you do investigate other providers, why? (Multiple answers possible)
5. Be open to change
Openness to new approaches by insurance providers is modest overall, but more significant among emerging customer segments. Insurance providers need to start thinking about how to position themselves successfully going forward. So what will the insurance provider of the future look like? Customers for insurance still want many basics, such as the human touch of experienced agents and brokers when buying insurance, and convenience and simplicity of services when buying online. But looking across age groups, we predict a progressive shift in demand over time towards more personalised and active risk advisory and sales approaches, which could include alternative channels rather than the use of agents. Younger Swiss customers are not seeking change but are the most open to it; and they will be drivers of change in the future. Our research shows greater openness - mainly from younger generations - to accepting new approaches to insurance, for example behavioural-based premiums or product-embedded offerings. Alternative providers are also more widely accepted among younger customers – this could be important, as tech giants have a history of entering into new markets with a distinct advantage in digital capability and data collection. This can give them a competitive advantage by allowing them to leverage their size to undercut competition and meet customer needs with compelling and highly personalised experiences. What we already see unfolding in other industries, such as banking, could also become a reality in insurance sooner rather than later. Insurance providers need to start thinking about how to act on these signs of change and how to position themselves successfully for the future: Will they be able to digitalise insurance successfully on their own - but without removing the essential human touch? What will be their differentiator in a digitalised world? Will they turn to the opportunities provided by emerging ecosystems? What role will insurance providers play in these and what will be their power relative to other participants? Can insurers in Switzerland successfully partner with ‘big tech’ or other alternative players – and not battle against them Older customers above 65 are 40% more likely to reject insurance offerings where premiums depend on DNA and similar factors 23% of customers under 30 would never buy from a non-traditional insurance provider – compared to 72% of customers above 65 The preference to buy insurance from a dedicated insurance provider rather than embedded within another product is three times higher in customers aged 65 or older than in customers aged below 30
Alternative insurance providers are emerging Traditional insurance providers need to be aware of the threat from alternative insurance providers, new product features that they might offer, and different sales methods or sales channels that they might use. More than half of all respondents would consider buying insurance from a non-traditional provider, such as a technology giant. This suggests that changes in the market are likely to happen, although the willingness to accept alternative providers decreases sharply with age: while 78% of respondents below 30 would consider an alternative provider, 72% of those over 65 would never buy from one (see Figure 22). 57% of customers say that they would think about buying insurance from non-traditional providers, such as tech giants. However, most customers would only consider buying if they had access to trained agents and in-depth information – in some cases even more information than they would expect from traditional providers So what changes might customers be willing to consider? One example is embedded insurance in products that individuals buy, for example within a car leasing contract or a rental contract for a flat. ‘White label’ insurance could enable insurers without a recognised brand to make inroads into some segments of the market – if they link up with strong partners or eco-systems that distribute them on their behalf. Figure 22: How would you feel if a non-traditional insurance provider such as a tech giant started selling simple insurance contracts? (By age group) Figure 23: How would you feel if the insurance was embedded directly into the product you are buying? (By age group) Behavioural-based pricing has some potential There is limited enthusiasm around behavioural-based alternative pricing models, but in the future new types of product might have merit Behavioural-based pricing of insurance policies is another innovative option. Respondents say that they are not entirely averse to insurance policies where the premium is based on factors they can influence. This could include factors such as driving behaviour, fitness, or lifestyle. Overall, 31% of respondents consider insurance premiums based on behavioural factors to be fair, and 46% would consider buying such a policy if the value for money is good (see Figure 24).  Using factors that cannot be influenced and are not easily verifiable – such DNA test results – is less acceptable. Traditionally in calculating policy premiums, insurance providers have applied factors that cannot be influenced, but only where these are easily verifiable – such as the insured person’s age or location. When pricing is dependent on more ‘secret’ factors, acceptance rates among respondents are significantly lower (see Figure 24). Among those respondents who might buy a policy with behavioural pricing, most would do so for the opportunity to pay only for what is needed (54%) or if lower premiums are based on the information collected from the policy holder (47%) − although how the personal data is used would be a concern for some (see Figure 25). Figure 24: How do you feel about buying a policy where the premium depends on personal factors? Figure 25: Having answered that you would consider a policy with premiums depending on personal factors under some circumstances, what circumstance(s) did you have in mind? Multiple answers possible If done correctly, push selling can work Another option for insurance providers is to be more active in selling insurance, and use a ‘push’ approach rather than wait for the customer to initiate a buying process. Respondents are divided in their views about ‘push’ selling of insurance, although more would prefer this approach if it were to come from agents rather than via digital channels. When asked how they might respond if their insurance provider were to push personal insurance policies via an app, many respondents (47%) dislike the idea (see Figure 26). However, only 40% would be averse to an agent reaching out periodically to sell insurance based on the agent’s personal or situational observations, because the customer would be more in control of the situation (see Figure 27). Younger customers are more open to insurance offerings being sold through a push approach, and this may well be something that insurance companies choose to use more in the future. Figure 26: How would you feel if an insurer provided an app that suggests insurance cover to you based on personal, specific situations it observes from your mobile phone? By age group Figure 27: How would you feel if an insurance agent whom you trust periodically contacted you to suggest insurance cover based on personal, specific situations he/she observes from talking to you? By age group
Find out more about the methodology we used.
Survey of insurance behaviour in Switzerland Our Approach Switzerland-wide survey of 1,000 customers for private insurance To analyse and understand the behaviour and preferences of customers in Switzerland for insurance products, Deloitte conducted a survey in December 2020 of 1,000 participants from the German and French speaking regions of the country, between the ages of 18 and 69. It focused solely on insurance for individuals and did not include small and medium-sized companies (SMEs). Participants across all age and income groups were sampled to provide a representative picture. The survey was aimed at understanding the drivers of how policyholders choose their insurance and the value of digital capabilities or human interaction during both the initial purchase and the policy renewal processes. In addition, it investigated customer’s openness towards alternative providers and innovative insurance offerings. Participants answered questions about both simple insurance products (such as motor, home and travel insurance) as well as more complex products (such as life assurance and personal pension/retirement policies). They were asked to disregard mandatory health insurance contracts and occupational pension contracts (mandatory BVG). Taking this into account more than 70% of all participants held between 1 and 4 insurance policies, with 28% holding 5 or more. Two-thirds reported that the majority of their policies, or even all of them, were with the same provider. The survey was designed by Deloitte and conducted through a specialist external research agency who identified the respondents and collected the data.
Participant's Age
Participants' household income
How many separate insurance contracts do you currently have?
Are your insurance contracts with the same insurer?
Understanding insurance buying behaviour in Switzerland The Swiss insurance sector is in a state of changeSwitzerland can pride itself on its healthy insurance sector with a large number of successful local and global insurance providers. The domestic market for personal insurance policies has been fairly stable, and insurance companies rely extensively on their network of agents. There has been only limited investment in digital technology, and although some alternative providers have entered the market with new product features and sales channels, they have not yet become a serious threat to the market incumbents. But there are indications that change is on the way and that disruption will come, just as it has in other industries such as banking. Surveying customers’ changing buying habits To find out more about how customer attitudes and behaviour may be changing, Deloitte conducted a survey of customers for insurance in Switzerland. We wanted to find out more about how individuals research insurance and reach their purchasing decisions; and we also wanted to ask about their satisfaction with the insurance market as it currently operates and whether they might be open to change. If customer needs are changing, insurance companies will need to respond in order to remain relevant. The questions that matter We were primarily interested in understanding how far change has progressed in some key areas: How important is the sales process - are customers focused on the details in the process, or are they happy to make a purchase without a deep understanding of the product? Many policies are still purchased through agents and brokers - but are customers becoming more open to buying directly from insurance providers? What is it that customers value the most when using agents and brokers - and what could agents and brokers do better? How effective are existing digital sales channels - and what characteristics are most appreciated when they work well? How loyal are customers - once they have bought one policy with a provider, are they likely to stay with that provider or to shop around? Will customers still buy insurance from traditional insurers in the future - or will they consider buying from non-insurers, or even Big Tech? How do policyholders feel about providing highly personal information as part of buying an insurance policy - such as a DNA sample or their driving behaviour? Are customers open to targeted “push selling” - or would they prefer a more subtle approach? Understanding the answers to these and other questions is key to preparing for the future - in the right ways, at the right time, for the right customer profiles.
Contacts and authors Acknowledgements We are grateful to Damian Rohr and Dennis Brandes for their valuable inputs to this report.

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