Aggregators aren't numerous in Switzerland, but the few that exist are mainly active in the health insurance domain. Actually, Switzerland has a particular compulsory health insurance system. Private insurance companies can offer the standard medical cover (part of the social security system) and are directly controlled by the federal authority under the responsibility of the health minister. Contributions are collected under the form of premiums, which can vary by region (canton) and age, but they are independent of the individual level of salary or wealth.
Since the launch of the compulsory health insurance system in 1996, premiums have continuously increased and the Swiss population put pressure on the government to find solutions to contain this increase. Among others, the health minister has decided recently to tackle the problem of intermediaries and commissions paid to them by insurers. The idea is to reduce insurer’s sales costs by 50 million Swiss francs. Approximately one-third of this amount is paid to online aggregators.
Where the problem becomes interesting is when we try to define what an aggregator is. According to the Swiss authority, a broker can be defined as an entity that brings two parties together, and proposes at least two different health insurance offers resulting in the payment of a commission by insurers. Therefore aggregators have to be considered brokers.
However, aggregators believe their business model is different. As they’re paid per quote submitted to insurers and not per effective sales generated, they believe their revenue cannot be considered a commission like traditional brokers but software-usage costs for insurers. In other words, insurers pay aggregators the right to use an advanced online insurance platform and they pay this right on a usage-basis (here a per-received-quote fee). Did you know that aggregators were the inventors of the Online Insurance Sales as a Service!
This blog has been reprinted with permission from
Nicolas Michellod is a senior analyst in Celent's insurance practice, and can be reached at nmichellod@celent.com.
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