On Wednesday, Swisscom presented its new insurance offers. Swisscom has been selling mobile phone insurance and cyber insurance for some years now. Recently, it added leisure insurance to its lineup. Now, Swisscom is extending its insurance lineup with household insurance and personal liability insurance.
In a couple of weeks, Swisscom will also launch home rental security deposit insurance in collaboration with AXA. It hopes to begin selling car insurance, legal insurance, and travel insurance by the end of the year.
Swisscom Sure is an insurance agent, not an insurer
Swisscom is not opening its own insurance company. It simply acts as an insurance broker, selling products underwritten by established insurance companies. For its travel insurance offers, Swisscom works with Europäischen Reiseversicherung (Helvetia). For its household and personal liability insurance offers, it works with the Zurich Insurance Group. These insurance companies carry the insurance risks.
Currently, Swisscom only sells insurance to its telecom customers who have a Swisscom mobile plan or home Internet plan. But Swisscom plans to also begin offering insurance products to customers who do not use its telecom plans.
App-based insurance, monthly premiums, and no minimum contract terms
With its new insurance offers, Swisscom focuses on three different features which it hopes will make it competitive:
- Firstly, the insurance offers are integrated into the My Swisscom online customer platform (mobile app and web portal). I find that practical, because you do not need to create a separate login. Swisscom customers can sign up for insurance directly with their existing login information.
- Secondly, the insurance premiums are charged monthly together with your Swisscom phone bill. The standard practice of many Swiss insurance companies is to charge premiums annually, with semi-annually or quarterly premiums offered as an optional paid service.
- Thirdly, you can terminate your insurance policy at any time by giving notice at least 14 days before the end of the month. You can also make changes to your policy at any time, and these take effect the following month.
My evaluation of Swisscom Sure
I entered my data to calculate the premiums I would pay for household and personal liability insurance. The offer did not sweep me off my feet: Getting insured through Swisscom would cost me around 100 francs more per year than what I pay with my current insurance provider. But that did not come as a surprise, because Swisscom generally does not use low pricing to attract customers. I opted for a low-cost insurance provider years ago.
What I do like about Swisscom’s insurance offers is that they can be terminated with a short 14-day notice period. That is a refreshing alternative to many insurance offers, some of which still have minimum contract terms of ten years. The paradox is that Swisscom does not extend the same customer-friendliness to its core business. Its mobile plans and home Internet plans normally have a 24-month minimum contract term.
I also appreciate the fact that you can pay your insurance premiums monthly. That would likely also be appreciated by consumers who are somewhat tight financially and cannot afford to pay for a whole year of insurance in one go.
A disadvantage is that you can only use Swisscom’s insurance offers if you have a Swisscom telecom plan. People who have to pay attention to their spending would generally opt for budget telecom service providers which charge around one-third of the Swisscom prices.
Not the first attempt
Swisscom is not the first market leader that has tried to sell insurance. Electronics and phone dealers, in particular, often sell mobile phone insurance. Swisscom too has offered phone insurance for many years now.
Other classic examples of companies that act as insurance brokers include travel agencies and online travel portals, many of which sell travel insurance for trips booked through them. In many cases, the insurance sold by these third-party dealers is somewhat disadvantageous and expensive, because the dealers get high sales commissions.
Credit card issuers also offer insurance. Other well-known companies also offer insurance that is underwritten by third-party insurance companies. The household insurance offered by IKEA and the car insurance from TCS and VCS are good examples.
But in spite of these attempts by third parties, Swiss are somewhat traditional when it comes to insurance. The bulk of insurance purchased over recent years was bought directly from conventional insurance companies.
Who wants to buy insurance from a telecom company?
From a consumer perspective, the entry of a new player in a market is generally a positive thing. Consumers benefit from a bigger selection of offers.
Personally though, I do not believe that many consumers are likely to buy insurance through their telecom service provider. Why would a consumer buy insurance through their telecom company instead of buying it directly from the insurance company.
The most plausible reason for consumers to buy insurance from a telecom company would be low prices. But Swisscom, with its somewhat expensive offers, is not exactly a price breaker.
Third-party brands are nothing new for Swisscom
Swisscom now sells insurance from third-party insurance companies under its own brand. The opposite arrangement is something Swisscom has experience with. The mobile plans sold by Swiss retailers Migros and Coop under the M-Budget and Coop Mobile brands are in fact Swisscom plans. Swisscom has been working with Migros for 19 years, and with Coop for five years. The advantage of these arrangements, for Swisscom, is that it can generate revenues from sales to price-sensitive consumers without cannibalizing its main brand. Outside of Switzerland too, many supermarket chains in particular offer third-party prepaid offers and mobile plans under their own brands.
But I can also remember a number of flops in this regard. Many years ago, both a well-known soft drink manufacturer and a major newspaper tried, unsuccessfully, to sell mobile plans with their own brand. Swisscom was not involved in those ventures, but they still serve to show that selling products under a third-party brand is not always successful.
Swisscom’s experiments have not always hit the mark
It would not be the first fail for Swisscom. Its iO app was meant to compete with messaging giant Whatsapp, its Siroop online retail platform was meant to compete with Amazon and Digitec, and its Tapit service was meant to revolutionize mobile payments. All of those projects failed. Whether or not Swisscom has accurately assessed its customers insurance needs is yet to be discovered. I am interested in seeing how it will play out.
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