echo interview with Bernard Perritaz, Member of the Executive Committee Kessler & Co Inc. (Head of Western Switzerland)

elipsLife echo: Digitalisation is turning a lot of things upside down in the insurance industry right now. As one of the leading brokerage companies in insurance and pension benefits consulting, how is Kessler approaching this topic?
Bernard Perritaz: Kessler views digitalisation first and foremost as an opportunity, so the topic has high priority. As advisors and intermediaries between insurers and policy holders, anything that helps to accelerate, improve and simplify processes and data quality helps us. Accordingly, we’ve invested a lot in digitalisation, both at company and industry level. Digitalisation affects the insurance industry in general, but also pension funds: Today, insured persons and employers want to communicate digitally - we simply have to be ready. 

What are the priorities in this regard?
At the industry level, it's mainly about getting a common technical infrastructure up and running, comparable to the banks' ‘SIX’ system. Unfortunately, the insurance industry in Switzerland is lagging behind in terms of digitalisation. Compared to a country like Belgium, which is strongly export-oriented like Switzerland, we’re 20 years behind. The reason is simple: For far too long, the Swiss market has been focusing on its own distribution system, largely in the hands of general insurance agencies and therefore heavily protected. So, there was no competition and little need to increase efficiency. We want to change that, for example with EcoHub [Editor's note: an online platform for the insurance, pension and broker industry] and companies like Sobrado.

Apart from digitalisation, what are the biggest challenges the broker market is facing?
We’ve been in a hard market for about two years now. And Covid has made the situation even more difficult. Today, we have to fight on all fronts to achieve good conditions for our customers. In addition, there’s strong competition within the broker market itself. At the moment we’re experiencing a wave of concentration with major merger and acquisition transactions going on. Kessler is very cautious in this respect. We’re focusing on organic growth. We’re not out to buy our customers or our employees, but rather to convince them through performance. The third major challenge is the lack of skilled personnel, like many other industries.

Even if Corona is overshadowing everything at the moment, old-age provisioning remains the biggest concern for the Swiss. Politicians have been struggling with the issue for years, the latest milestone being the decision by the Council of States to raise the retirement age for women to 65 as part of the AHV reform. What’s your position on this?
For me, equalising the retirement age is a matter of course. It’s right and necessary. Of course, the equality and compensation issues also have to be solved, but there’s no reason today to have different retirement ages for men and women. I’m convinced that the Swiss people are ready for this step.  

The number of company-owned pension funds is constantly decreasing, the trend is towards collective foundations. Will this development continue? 
Yes, quite clearly. Soon there will be fewer than 1000 pension funds in Switzerland. This trend allows for more professionalism and gives us brokers the opportunity to offer qualified advisory services. But it also places a great responsibility for the insured on us.

Should pension recipients participate in the restructuring of the pension system - or are pension entitlements once acquired taboo?
People trust and rely on the second pillar. Its reputation is consequently unquestioned. Pension entitlements should therefore not be tampered with. The credibility of the second pillar depends on having guaranteed pensions.

Does the 3rd pillar need more state encouragement to relieve pressure on the first and second pillars?
That wouldn’t be a bad thing, especially for the middle class. I can well imagine an increase in the tax deduction cap as well as the possibility of making retrospective annual purchases. However, low-income groups wouldn’t benefit from such measures, so the effect on the overall system would be limited. 

Despite the reform backlog, Switzerland's old-age pension system with its 3 pillars is regarded internationally as a model. What do we do better than France or Germany, for example? 
Diversification, that is not putting all our eggs in one basket, gives us advantages. Our system is decentralised, flexible and responsibilities are broad-based. Compared to Germany or France, our pension system is much better capitalised. While our neighbours rely on the pay-as-you-go system, we also use individual and collective capitalisation. On the other hand, the Swiss system is more complicated and the idea of solidarity is less pronounced than in Germany or France.

^{1) www.iaf.ch/bildungsabschluesse/dipl-beraterin-berufliche-vorsorge-iaf/ (Academic qualification as a consultant for occupational pensions)}