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Dying, Surviving or Thriving

Stay within your comfort zone or reshape the reinsurance industry?

Our latest thought leadership on the reinsurance industry proposes three main strategic growth options reinsurers should consider to thrive in a difficult environment. Do you opt for a “me too strategy” or commit to stand out from peers?

Contact us


EY - Adrian Halter

Adrian Halter

Executive Director
Reinsurance Leader

Phone: +41 58 289 38 35

EY - Yamin Gröninger

Yamin Gröninger

Insurance Business Development
Leader Switzerland

Phone: +41 58 289 39 01

EY - Florian Liebe

Florian Liebe

Executive Director
European Actuarial Services

Phone: +41 58 289 46 83

EY - Michal Suchan

Michal Suchan

Senior Manager
European Actuarial Services

Phone: +41 58 289 61 87

EY - Niklas Jabs

Niklas Jabs

Senior Consultant
Strategic Solutions


Phone: +41 58 289 38 06

EY - Giovanni Linardi

Giovanni Linardi

Strategic Solutions


Phone: +41 58 289 45 07

Study design

The study is based on a hypothesis-driven analysis carried out by our EY consultants and industry specialists within the EY network. The data on which the study is based consists of numerous annual reports and investor presentations of reinsurers, brokers, primary insurers as well as fintechs – complemented by interviews and insights from domestic and international reinsurance related advisory and audit mandates of EY.

The insurance market environment is currently deteriorating and new competitors prepare to make their entry. The sector currently faces turbulent times. A successful strategy is key. In our series, we regularly analyze the Swiss Insurance market and identify risks and strategies.

‘Red ocean’ refers to industries marked by saturation and high competition, where all players try to outperform rivals and grab a greater market share.

  • Painful reality

    The Swiss insurance market is becoming a red ocean. Macroeconomic outlook, population growth, complexity of customer demand, customer lifestyle changes, and price sensitivity all limit Swiss insurers’ prospects for profitable growth. The market is growing too slowly to accommodate companies’ targets, and insurers face the challenge of tapping new business segments and good risks.

  • Macroeconomic outlook

    The macroeconomic environment remains challenging, with the strong Swiss franc hindering swift economic recovery. Between 2008 and 2014, per capita gross domestic product edged up a mere 0.17 per cent: important for insurers given the correlation between premiums and economic growth.

  • Demographic change

    In recent years, insurers have seen a reliable source of growth in the increase in Switzerland’s resident population, driven mainly by immigration, but this trend is losing momentum. After revising its forecast downward, the OECD now anticipates an increase of 0.61 per cent over the next five years compared with its original 0.76 per cent projection.

    Population growth could slow further if immigration is restrained by the Government’s mass immigration initiative, along with additional intervention, will further contracting demand.

  • Complexity of customer demand

    Demographic change poses another challenge. Customer segments ‒ roughly split into digital natives, baby boomers and retirees – are shifting, pushing up sales and distribution costs.

    While retirees continue to seek one-to-one contact when buying policies, baby boomers get their information online, but buy their policies from customer advisors – in contrast to digital natives who opt exclusively for electronic channels and want speed and convenience. Building up know-how and infrastructure for the various customer groups adds substantial cost and intensifies pressure on margins.

    Increasing life expectancy is driving demographic change. This creates additional demand for individual products, such as car insurance as people continue to drive later in life, but also increases costs in health insurance, and through rising technical provisions, in life insurance.

  • Lifestyle change

    The insurance business is increasingly impacted by a growing environmental awareness and the ramifications of climate change. The number of motor vehicle registrations in Switzerland demonstrates this. After steady growth of three per cent, the market has stagnated since 2011.

  • Price sensitivity

    In 2014, per capita spending on insurance in Switzerland came to CHF 7,267 - or no less than twelve per cent of income. Only Luxembourg spends more per capita on insurance.

    One thing is clear from the figures: The Swiss insurance market is saturated, and many consumers are overinsured. Most of the money spent goes to mandatory products like health or car insurance, and this spending decreases in tough economic times as consumers optimize their insurance choices, as was evident between 2006 and 2009.


See also

  • The illusion of growth
  • The reality of a ”red ocean”
  • Radical market dynamics
  • 45 percent of players will not survive
  • Do you want to thrive?

Dying, Surviving or Thriving

Radical market dynamics

Developments in society and technology are forcing fundamental change on the insurance sector.

As technology advances, automated, data-based processes are becoming increasingly dominant, forcing completely new business models. At the same time, it is getting more difficult to reach customers, as price sensitivity increases and loyalty decreases.

Insurers need modern data-driven analytics in order to better understand their customers and enhance underwriting. Moreover, these changes are lowering barriers to market entry, making it easier for disruptive attackers to find a foothold.

The industry will be disrupted – small disruptors are already radically changing market dynamics, and big players from other industries are beginning to enter the market.

  • New technologies

    New technologies allow greater efficiency, accelerate processes in claim management and streamline communication. But these changes are also threatening fundamental aspects of the market. New technologies make the world a safer place – for instance, the number of traffic casualties has been decreasing for years - but this type of positive changes means less business for insurers. The better people get at controlling risks, the lower their demand for insurance coverage.

  • Disruptive market players

    Digitization has taken the insurance market by storm. New, disruptive business models are proliferating, and numerous start-ups have gone into operation. Both factors challenge established business models and break up the value chain.

    So far, the new providers have only conquered small segments of the market, so their potential to fundamentally change the market is still limited. Having said that, insurtechs clearly bring greater competition and lower prices. Three elements of the value chain are critical here: the customer side, process innovations and new business models.

  • Large players

    It’s not just innovative start-ups that threaten insurance companies’ market position. Major players from outside the industry also have their sights on customers. The fact is that in just about every business segment there are players outside the industry who know insurance customers better than the insurers do.

    Manufacturers’ proximity to customers generally allows them to offer insurance immediately when a product is bought. A major mobile phone producer has been offering its own insurance for its smartphones, tablets and notebooks for five years now, and hospitals and manufacturers of medical technology are also making the most of this advantage. Last year, a manufacturer of diagnostic devices began to also sell health insurance.

  • Lower entry barriers

    Many experts still see the Swiss insurance market as sheltered. But these natural barriers are losing significance, and this change should be noted.

    Attracting capital: The insurance business is capital-intensive, posing a challenge for insurtechs. However, major corporations equipped with a solid capital basis have no difficulty attracting funds in capital markets.

    Personnel: With digitization, know-how is less decisive for success. It’s technology that counts.

    IT and technology: Insurtechs are breaking up the value chain, allowing new providers to directly source software solutions for sales, claim settlement or risk management.

    Reinsurance: New providers benefit from the fact that reinsurers are increasingly offering their services to companies outside the traditional market.

    Branding: Trust is at the core of the insurance business, making a strong brand a basic precondition. That is exactly what big players from outside the industry have - a strength they could exploit in a bid to penetrate the market.


See also

  • The illusion of growth
  • The reality of a ”red ocean”
  • Radical market dynamics
  • 45 percent of players will not survive
  • Do you want to thrive?