Agent Productivity in Switzerland Declining
Over the past 5 years, the Swiss insurance market has recorded annual growth of 3.7%. Approximately 2% is attributable to price effects from higher premiums and 1.7% to volume effects, i.e., through population or customer growth. In contrast, according to SVV statistics, the number of field staff has increased by 2.9% per year, which is above average. Customer growth is thus not keeping pace with agent growth, implying a decline in productivity, at least in the retail sector.
In comparison, according to recent evaluations by the GDV, the productivity of tied agents in Germany has increased significantly over the past ten years. Calculating the average operating profit per agency, the increase since 2010 is around 40%.
In Germany, three factors work together: First, the ongoing consolidation of the intermediary market has led to the remaining agents now managing larger portfolios and using their resources more efficiently. Second, professionalization initiatives and the advancing digitalization of business processes have enabled noticeable efficiency gains. Third, comprehensive premium increases, particularly in property, accident, and health insurance, provide additional revenue momentum and solidify the positive productivity trend.
Where Are the Productivity Gains in Switzerland?
Even though Swiss insurers have driven extensive measures in recent years, such as reorganizations, product and process simplifications, and increased digitalization of advisory and sales, the productivity gains have not materialized.
One reason is that the full impact of digitalization is missing. Although the topic is on every CEO’s agenda and millions are being invested, it does not yet seem to be delivering the hoped-for efficiencies. Merely developing new technical possibilities does not lead to the field staff or customers adapting their usage behavior. The adoption of new processes takes time.
The other reason is that the insurance business in Switzerland remains a distinct “people business.” This is why we see stagnation at a low level in the direct channel, as despite significant investments and attention, only a market share of around 5–10% is achieved, depending on the product line.
Insurance is a trust product. The tied agent therefore is and remains a central component of the distribution model. However, many Swiss insurers also struggle with high turnover among their agents. This turnover is further exacerbated by factors such as changing job profiles, increasing regulatory requirements, and competition for increasingly scarce talent. This inhibits the expected productivity increases.
How the recently announced Helvetia Baloise fusion will concretely play out remains to be seen. With increased uncertainty, more turnover can be expected, an opportunity for the rest of the market to attract and retain productive agents.
What’s Next for Tied Agents?
Last year’s Investor Day presentations were packed with profit growth targets. Therefore, the topic of productivity gains in the agent channel cannot be missing from any agenda.
Retaining Agents Long-Term
Successful insurers manage to align compensation systems for the long term. Good models create a balanced mix of acquisition commissions, portfolio provisions, and quality bonuses, and on this basis, also a control framework to steer the business.
With clear career paths and adapted working models, the agent portfolio can be secured for the long term. When intermediaries are rewarded not only for quick sales but also for sustainable customer loyalty, insurers can slow turnover and retain know-how permanently in-house.
Increasing Productivity
At the same time, there is no way around the hybrid agent channel. Digital self-service platforms, robo-advisory modules, and AI-supported needs detection handle routine tasks, while the personal advisor intervenes in complex issues with a 360-degree customer view. It is crucial that the transition between online platform, video consultation, and physical agency visit functions seamlessly. This must be consistently expanded to gain customer proximity. And be adopted by the customer.
Advisory quality paired with genuine customer trust is and remains the differentiating characteristic for the field staff. Insurers who lead their intermediaries according to clear incentive and role logics and support their work through intelligent hybrid platforms will be able to harvest the productivity dividend.
Those in the market who are bold will examine a partial reintegration of the tied agent. This enables deepening competencies, binding talent long-term, and aligning specific skills with customers. A model that has long been established in private banking.
Michael Kunz-Schelling, Managing Director, Kunz+Company AG
The views expressed in this post are solely my own. To expand the research spectrum, test analytical approaches, and refine the style, I used generative AI tools; the ultimate responsibility for every insight and expression lies with me.
Sources
- FINEWS: SVV Premiums 2024
- SVV Personnel Statistics 2023 (PDF)
- EIOPA Country Analysis: Germany (PDF)
- Marshberry Insurance Distribution Report Europe (PDF)
- GDV: Employees in German Insurance Sector
- GDV: Insurance Premiums in Germany by Line
- Allgemeiner Fachverlag: Quality Consolidation in Exclusive Distribution
