An insurance study* that Synpulse helped to devise has found that while there are plenty of insurance solutions available on the market for SMEs in Switzerland, there are nevertheless clear deficits. What are they?
Our study has revealed that there is a structural dilemma in the insurance market for small and micro enterprises. To put it bluntly, customers seem to want tailored products and solutions and personal advice, but are unwilling or unable to pay for them. Insurers want to increase their customer focus, but are unwilling or unable to cover the cost of personalising their offering. The classic response to this “mass customisation” phenomenon is the intelligent automation of product design based on a modular system. The digitalisation of the customer interface is further complicated by the fact that there is limited enthusiasm among most customers for such solutions.

You mentioned that digitalisation is playing an important role in the insurance industry. How mature are the much-vaunted, innovative digital insurance solutions really?
Major differences can be observed and it is often interesting to look behind the digital scenes. Until now, the focus has tended to be on new business, so the potential of other processes and service options has not been exploited. Insurers often concentrate their digital solutions on individual core processes (product, distribution, underwriting etc.). A fundamental, holistic transformation along the entire value chain has so far largely failed to materialise. However, insurers wishing to rethink digital insurance solutions are doing just that, and will be able to leverage the full potential benefits if they digitally integrate and transform all their core processes. In addition, there are many trust-based aspects – instances in which customers would prefer to talk to a person. We therefore firmly believe that hybrid solutions will play a key role in the provision of advice and support in the years to come.

Hybrid solutions rather than full digitalisation?
Yes, absolutely. The future is in digital advisory and support solutions for which technology is not an end in itself but directly supports customer advisors in their work. Only a small percentage of solutions supporting customer interaction are fully digital. Investments in the digitalisation of customer interaction are currently aimed at supporting advisors. Investments in automation and process efficiency are not as noticeable to customers, even if they remain crucial for dealing with cost pressures.

Can you give us a specific example of a successful technological innovation in the insurance market?
There are some exciting developments and successful examples on the market. For example, Swiss Life has successfully digitalised the processes underlying the provision of its hybrid advisory services. Modern technology supports advisors in their interaction with customers and strengthens the physical sales channels.

When we look at the value propositions of many providers, it seems that insurance solutions need to be personalised, fast and digital. What is the priority from the perspective of SMEs?
Our study showed that the top priority for SMEs was precisely tailored insurance cover and the quality of advice. Price was ranked in third place. In other words, SMEs do look at the price, but primarily wish to be properly covered against key risks.

Brokers are essential for SMEs when it comes to insurance matters. What do brokers need in order to be able to provide professional and comprehensive advice to SMEs?
Brokers play a key role for many SMEs when it comes to understanding the wide range of insurance products available and finding the right solution. At the same time, the broker market is facing increasing pressure from several directions. Cost pressures and regulatory requirements are growing, forcing brokers to exploit economies of scale and increase efficiency. Brokers are expecting more technical support from insurers in order to increase efficiency and make their advisory services even more professional.

According to your study, 80% of companies have policies with multiple insurers, which is not conducive to partnerships. What particular challenges do insurers have to overcome in order to achieve lasting success with SMEs?
SMEs often deliberately spread their policies across multiple insurers in the hope of reciprocal business. As I say, insurance cover and quality of advice are the key factors when it comes to taking out insurance. At the same time, it’s the price that often triggers a switch to a different provider. This applies in particular to accident and short-term disability benefit insurance.

If you could give insurance companies some advice, what should they focus on in the years to come?
On technology and digitalisation, but always linked to customer value. Technology should not be promoted for its own sake, but in order to offer genuine added value to customers. Another focal point is data and artificial intelligence (AI). Insurance companies need to move towards data-driven organisation. Finally, it is important to prepare for new sales channels. The trend towards “embedded insurance” is also becoming relevant for the SME business. This is where insurance is seamlessly embedded in other products and services as an inherent component, saving time and money, but also enabling personalised insurance solutions. Initial examples in the SME segment can be seen in the US, where occupational accident insurance is embedded in payroll solutions.

*Versicherung von Klein- und Mikrounternehmen: Ein unterversorgter Markt (insurance for small and micro enterprises: an underserved market – in German only). Published in 2023 by Synpulse Switzerland Ltd., Zühlke Engineering Ltd and ZHAW Zurich University of Applied Sciences.