From a telecommunications group to an IT service provider to an insurance broker: Swisscom continues to expand into new business areas.
In the future, Swisscom customers will not only be able to take out a cell phone contract or a TV subscription with their telecommunications provider, but also insurance. On Wednesday, the group launched the corresponding offer under the name “Swisscom sure”.
Swisscom has had insurance for devices and cybersecurity in its program for several years. But now she wants to go much further: customers should be able to take out liability and travel insurance, and insurance for motor vehicles or pets is also planned.
Swisscom does not want to act as a primary insurer
During the presentation to the media, Dirk Wierzbitzki, head of the private customers department, made it a point to emphasize that Swisscom would in no way become a primary insurer: “We sell and arrange insurance from cooperation partners.” It starts with liability and household contents insurance through Zurich as well as leisure insurance in cooperation with the provider ERV. Rental deposit insurance from Axa will follow shortly.
According to Wierzbitzki, such offers make sense for Swisscom from a business perspective. This means that if customers book a roaming package for a trip in the future, they can be offered travel insurance at the same time. And if a customer moves in the future and contacts Swisscom about a new connection, they could be made aware that the company also offers household contents insurance.
According to its own statements, Swisscom is gearing itself to customer needs, which it asked in advance in a survey. Accordingly, simplicity, clarity and flexibility are important to customers when it comes to insurance, which is what a group can offer. In addition, the existing device insurance policies appear to be very popular with customers: around 30 percent take out such insurance, according to Wierzbitzki.
Insurance in all areas of life
From Swisscom’s point of view, it obviously makes sense to venture into other insurance areas. According to the company, the prices are in line with the market and the group receives a share of the profits from the business for its brokerage services.
The first products have already been launched, and more are to follow in a second wave: legal protection, motor vehicles, payment defaults and even pets – in almost all areas of daily life it will be possible to insure yourself with the telecom company in the future. The group has decidedly ruled out entering the life or health insurance business.
When asked whether a commitment in the insurance sector could be reconciled with Swisscom’s strategic goals prescribed by the Federal Council, Dirk Wierzbitzki explained that the Federal Council had, among other things, ordered Swisscom to make a contribution to the digitalization of Switzerland. Now you do this in the insurance sector by setting up your own platform for concluding contracts. After a comprehensive legal review, Swisscom came to the conclusion that it was possible to enter the business as an intermediary.
A large customer base from monopoly times
Nevertheless, the move is likely to be viewed critically by some market observers. As a former monopoly company, Swisscom ultimately has access to a comprehensive customer base to which it can provide insurance products. The fact that Swisscom is still 51 percent owned by the state gives the telecom provider further competitive advantages over its competitors.
Jürg Grossen, President of the Green Liberal Party and Bernese National Councilor, is therefore criticizing the plans: “State-owned companies should concentrate on services that are necessary for basic services and are not sufficiently provided by private providers. Insurance is offered to a sufficient extent and at a reasonable price; a state-owned company does not have to and should not compete through competitive advantages.”
Proposals for privatization submitted
In fact, two years ago, Parliament approved motions according to which the Federal Council should propose changes to the law “in order to curb distortions of competition by state-owned companies”. In September 2023, the Federal Council commissioned the responsible economic department to develop a new regulation.
Meanwhile, Jürg Grossen, like his party colleague Barbara Schaffner, submitted a proposal to privatize Swisscom in March. Accordingly, the Federal Council should examine how Swisscom’s universal service mandate could be fulfilled without the state’s majority stake. The stumbling block was the takeover of Vodafone Italia by the Italian Swisscom subsidiary Fastweb.
However, as the majority owner of Swisscom, the federal government has always supported its growth strategy. This has led to the company now being much more than a telecommunications group: IT service provider, entertainment group, payment processor – and now also an insurance broker.