The Swiss SME segment represents most companies in the country. There is tremendous potential for insurers to grow in this segment, provided they can meet the evolving business needs of SMEs.
By Martin Gertsch, Director Business Operations & Innovation Insurance Deloitte Switzerland
SMEs make up more than 99 percent of companies in Switzerland and account for almost two-thirds of the nation’s jobs. According to Deloitte’s SME Insurance Report «The future of small business insurance – What do customers want?», it is a segment in which insurers can still grow substantially by offering additional protection or advisory services. This is because SMEs are increasingly realizing the value of insurance.
Since the outbreak of the Covid pandemic, their level of trust in insurers seems to be at an all-time high. The positive experiences with insurers during the crisis made a real impression on SMEs. And yet, while trust is high, more could be done. Many of the 5,300 SMEs surveyed globally and 400 in Switzerland express an appetite for more advisory services and for products better suited to protecting their business. This could create new growth opportunities for insurance companies.
SMEs Want a Trusted Advisor and Digital Channels
A second trend is the desire of SMEs to have a trusted advisor in addition to digital channels. The report suggests that the way in which SMEs engage with their insurance provider is driven by the characteristics of the specific person buying the insurance, not the company or underlying industry. SMEs value personal interaction with agents and brokers, while digital engagement with their insurance provider is also becoming more important. Incentivising and enabling brokers and agents to become better advisors will create opportunities for bold, growth-focused insurers.
SMEs Open to Non-Traditional Players
A third trend identified by the report is the need among SMEs for advice and a holistic range of services that does not just include insurance. SMEs are looking to their insurance provider for solutions beyond traditional insurance coverage. They are interested in purchasing additional services to protect themselves, and they want advice on the main risks facing their business.
Moreover, Swiss SMEs are open to purchasing insurance coverage and services from non-traditional players, such as large technology companies. Insurance providers that understand SMEs better than big tech can expand their standard range of solutions by providing advisory services and leveraging partners and ecosystems.
SMEs More Vulnerable to Damage and Losses
Post-Covid, SMEs are more aware of their risks and vulnerabilities and are likely to increase their insurance spending. The survey shows that even in a mature market like Switzerland, 53 percent of Swiss SMEs expect to spend more on business insurance in the near future.
The report suggests that, among SMEs, the main driver for purchasing more insurance is their increased vulnerability to damage and losses in the post-Covid world. The events of recent years have demonstrated to Swiss SMEs the potential impact of systemic risks such as utility failures and other potential «black swan» events.
With the war against Ukraine, cyber risks are also becoming more apparent, with state-sponsored attackers exploiting vulnerabilities to gain access to or interrupt critical applications and infrastructure. As a result of these uncertainties, SMEs are constantly looking to add new types of coverage to their portfolios and understand changes in the risk landscape:
Services that Swiss SMEs would use if offered by their insurer (Click graphic for larger view)
Insurers Facing New Challenges
According to the study, not only insurance coverage but also proactive risk analysis and advice to better understand the risk exposure will be appreciated by SMEs. Insurers should take a greater interest in insurance products among SMEs as a sign of future growth in the segment and should move quickly to design new products and propositions aligned with these evolving needs.
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