On 20th January 2022, Swiss InsurTech Hub (SIH) together with the Institute of Financial Service Zug held a panel discussion about the Future of Insurance in Switzerland, focusing primarily on the current and future importance of bancassurance distribution. The panel consisted of experienced insurance and banking professionals with strong knowledge of the Swiss insurance market.
- Michael Dritsas, Chief Executive Officer at vlot.
- Anna Maria Rizzi, Global Digital Distribution Manager at Zurich
- Christian Maehr, Head of Digital Corporate Bank at UBS
- Thomas Rettenwander, Business Development Manager at bsurance
We summarized below key takeaways from our discussion:
Take-Away No. 1:
Although we have seen examples of announced bancassurance partnerships between banks and insurers (e.g., AXA & Credit Suisse, Zurich & UBS) in Switzerland during past years, their potential has not been fully leveraged yet. The fully digital insurance products embedded in banks online service offerings in big scale are yet to be seen. The root cause can be the fact that Switzerland is a conservative market with slowly changing customer preferences and the slow pace in digitalization of Swiss companies, particularly in the insurance sector. However, the search for a compelling growth story and increasing relevance for customers (particularly maturing digital-savvy generations) are strong driving forces for insurers and banks to reimagine their service offerings and their distribution to fit the digital age.
Take-Away No. 2:
IFZ Insurance research study conducted in Switzerland in 2021 showed that despite currently low importance of banks in the insurance distribution channel mix, 70% (out of 130) insurers expect that bancassurance importance will grow in the next 5 years.
Life insurance particularly is the area where the banks can increase their offerings thanks to the natural ties with the need for life/income protection insurance products. In fact, according to the IFZ Insurance research study from 2020, life insurers felt more threatened by traditional banks (e.g., UBS, CS, Cantonal banks) than by FinTechs and InsurTechs.
Expansion of banks offerings with insurance products can be backed up by the results of the IFZ Insurance research study from 2021 showing that 44% out of 447 respondents could imagine purchasing non-banking services from banks, where 64% of them believed that it should be insurance products.
Take-Away No. 3:
The choice of an optimal bancassurance partnership model depends on various aspects such as the size of the deal, its duration, level of expected commitment or level of required integration. No matter which model you choose it is important to dedicate enough time to the negotiations and contracts so that both parties are happy with the outcome. Practice shows that contracts are not future proof, therefore sooner or later you will find a gap, however it is the strong relationship among the partners that will allow to find mutually convenient solutions in such cases.
To build successful bancassurance partnerships, make sure you have a strong foundation (i.e., solid use case) and you spend a serious amount of time to get to know and understand your partner.
Take-Away No. 4:
The evolution of digital technology and data analytics has created a new operating model for the delivery of bancassurance, moving away from face-to-face delivery to building fully digital customer journeys for their onboarding and servicing. This requires greater integration of IT capabilities between partners. InsurTech and FinTech start-ups can help build bridges between banks and insurance companies enabling seamless integration of front-end and back-ends without the need to touch internal legacy systems.
Take-Away No. 5:
Having its own powerful sales force in form of general agencies is not a roadblock for insurers to fully open up to bancassurance partnerships. As an insurer, the open and timely communication with their agencies is key to make multichannel approach successful.