70% of respondents feel adequately insured when it comes to simple products.

However, less than half feel the same way for complex products.

33% of respondents say that their level of understanding of insurance coverage for complex products is low

Only 34% of respondents rate their level of understanding of complex products as ‘profound’ or ‘good’.

More than 8 in 10 are uncomfortable with purchasing insurance products only on trust.

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.

More than 2 in 5 respondents rely on agents or brokers to obtain information on insurance matters

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.

People below the age of 30 use all available channels to research insurance matters

The majority of respondents still prefer to buy insurance in person. However, 39% prefer to purchase simple insurance over the phone (19%) or via a website (20%)

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.

More than 3 in 5 respondents rely on agents or brokers to purchase any complex or simple product.

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%).

79% of survey respondents rate trust as an important factor when buying insurance from an agent or broker. 76% rate expertise whereas only 23% rate convenience as an important factor.

Around one -third of customers under 30 see convenience as a value proposition for agents.

Price (50%), product (24%) and personal advice (13%) are considered the most important aspects when buying insurance.

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.

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.

97% of respondents rate an “easy to understand policy contract” as an important digital capability followed by the ability to renew / adjust existing contracts (95%) and the ability to sign up online and activate policies quickly (87%) when buying insurance

87% of respondents value the ability to handle claims online as the most important digital capability followed by access to a digital customer portal (82%) and to an online premium calculator when selecting an insurance provider (81%).

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’.

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.

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.

Only 17% of respondents would consider buying a policy where the premium depends on personal factors that are not easily observable and cannot be changed (such as DNA) to be fair. However, 77% would consider buying insurance where the premium depends on factors that can be influenced (e.g.driving behaviour).

Older customers above 65 are 40% more likely to reject insurance offerings where premiums depend on DNA and similar factors

More than 57% of respondents would consider buying insurance from a non-traditional insurance provider

23% of customers under 30 would never buy from a non-traditional insurance provider – compared to 72% of customers above 65

71% of respondents would consider buying products such as cars or a concert ticket with directly embedded insurance

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.

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).

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.

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.

Understanding insurance buying behaviour in Switzerland

The Swiss insurance sector is in a state of change
Switzerland 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.