Postfinance is silently gaining a foothold in the car insurance sector. Initially, its car insurance is only available to post office and Postfinance employees, but if things go according to plan, it should be available to the general public in the near future.
Curiously for a bank that built its customer base on the basis of the broad post office network, the Postfinance car insurance will only be offered through digital channels. In this way, Postfinance hopes to cut out the costs associated with providing insurance consultation at its branch offices or at post offices.
Why would Postfinance sell car insurance?
According to Postfinance, offering insurance is part of its drive towards generating revenues from banking-related financial products which are not related to interest rates. Postfinance believes that the insurance sector is banking-related. Postfinance already has a partnership with AXA through which it sells AXA life insurance products.
However, it is fair to argue that car insurance is less closely related to banking than life insurance. This makes Postfinance’s entry into the car insurance market somewhat surprising.
Is Postfinance on its way to becoming an all finance service provider?
Postfinance clearly stated to moneyland.ch that it is and will always be a bank, but it will not rule out the possibility of offering insurance products.
A look at the information provided to agents shows that Postfinance is open to offering property, liability and casualty insurance in the future. Its portfolio also includes travel insurance and legal protection insurance.
Various Swiss banks and insurance companies already have partnerships. But all finance services have, as of yet, been a niche market in Switzerland.
According to moneyland.ch CEO Benjamin Manz, “Digitization and increasing competition may bring all finance back into the limelight in the years to come. Banks are also likely to encounter increasing competition from foreign financial services providers.” It is very likely that banks will attempt to expand their service offerings by cross-selling and up-selling products from third parties to their existing customers.
How do the car insurance offers from Postfinance compare to other Swiss car insurance policies?
Currently, only postal service employees have access to premiums. The premiums which the general public will pay may differ from those paid by postal employees. It is expected that premiums for Postfinance car insurance will be relatively low.
However, there are already some online car insurance providers in Switzerland which use low-cost strategies to target consumers.
The coverage provided is similar to that provided by other Swiss car insurance policies. A 3-month notice period applies to policy terminations, which is typical. There are other Swiss insurers which allow policyholders to terminate their policies on a monthly basis.
A strongpoint of the Postfinance car insurance is that it does not use a bonus-malus system, meaning premiums do not increase after claims are filed. Dextra and Zurich also do not use bonus-malus systems for their car insurance policies.
The weakest feature of the Postfinance insurance is its write-off compensation schedule for comprehensive and collision car insurance. Compensation for write-offs is among the least favorable used by any Swiss insurer.
Another negative is the fact that only drivers which are at least 23 years old and have held their drivers’ licenses for a minimum of 3 years are eligible to apply as the primary driver. This cuts young drivers out of the prospective customer base.
Is Postfinance an insurance provider?
No. Postfinance is not a licensed insurance provider. It sells car insurance in collaboration with Swiss insurance distributor TONI Digital Solutions AG. TONI, in turn, sells insurance provided by German insurance company Great Lakes Insurance SE – a subsidiary of Munich Re – which has a licensed Swiss subsidiary headquartered in Baar.
What is Postfinance not working with a Swiss insurance company?
Postfinance says that by working with Munich Re, it is able to offer very favorable conditions to consumers. In other words, Postfinance benefits from better profit margins by working with Munich Re than would be possible if it worked with a Swiss insurance provider.
Will Postfinance revolutionize the car insurance market?
Postfinance already sells life insurance from AXA and brokers mortgages for Valiant Bank and the German Münchner Hypothekenbank.
It receives what amounts to commissions on the sale of these products. So far, the insurance offerings from Postfinance have not heavily disrupted their corresponding markets.
“The entry of Postfinance will not likely have a major impact on the Swiss car insurance market,” predicts Benjamin Manz. In order to effect any radical changes with its digital-only car insurance, Postfinance would have to offer truly unique insurance policies and invest heavily in digital marketing. That scenario is highly unlikely.