The actors believe in concentration of the value chain in the field of Accident & Health insurance

The Nordic Accident & Health insurance market

The Swedish insurance market is looking for new possibilities for income – back to the roots – to share the risk between insurers within the area of accident & health insurance. 

The interest in Swedish for accident & health  insurance products among producers as well as distributors has increased substantially in recent years. Niche actors like e.g. Ikano and EuroAccident have been added. Yet interest is still low among the broad public. A questionnaire survey conducted by Swiss Re 2010 shows that we in Sweden are to a higher degree underinsured in terms of death cover compared to e.g. France, Norway and Denmark. According to some observers this is partly because we Swedes still believe that we will be looked the community, by the union or employer.

The market for the competition-exposed component of personal risk insurance has in recent years had an even and steady development, with regard to premium income. In the current situation it lies at approx. SEK 18 billion in premium revenues per year. The one that has increased in a significant way is healthcare insurance +86 percent. What in future can affect this even and steady development of the market to increase the momentum is political decision e.g. deductibility for private healthcare insurance. It may also be disruptive of monopoly e.g. AFA’s regarding industrial injuries insurance and KPA’s regarding TGL within the municipal sector.

Several of the actors we have talked with believe that a consolidation within the industry will take place to create cost-effectiveness and profitability. Especially within heathcare insurance where economies of scale are particularly noticeable. This also affects the value chain. Some of the actors believe in concentration – fewer involved in the value chain makes it more cost-effective. Others in turn believe that it will instead lead to increased specialisation i.e. the one who is best able to perform its part of the value chain. There are already today examples of this when large traditional insurance companies choose to distribute products from other niche-focused life insurance companies.

There is currently an opinion that the value chain is slightly too long today and that there are too many middlemen who want to earn money, which in its turn becomes dearer for the customer. Many times however this is an expression of special interest. Perhaps a new regulatory framework (e.g. Solvensy 2) will clarify the requirement for transparency and control of the value chain i.e. reduce the number of middlemen. Most actors – irrespective of whether they have their origin in the production line or distribution line – would preferably like to increase their part of the value chain. There is an opinion that the larger brokers are actively trying to increase its part of the value chain without taking any risk, either insurance risk or any financial risk.

There will probably be an increased refinement in that there will be more who will specialise in their part of the value chain e.g. as distributor or as producer. One can also imagine that there will be a bigger geographic distribution of actors because of, for example, lower costs in the north of Sweden than in metropolitan regions e.g. through lower staff turnover and the cost of premises.