Lockton Sweden continues to move from strength to strength. As part of Lockton’s growth strategy, Affinity insurance solutions were recently introduced to support our clients operating within the Swedish market.
Affinity schemes can offer bespoke insurance solutions to an organisation’s members, or white label insurance as value add-ons attached to clients’ core products or services for end customers.
Patrick Rönnqvist, Head of Affinity, Lockton Sweden, will lead the division and look to draw on his extensive industry experience as Lockton expands its operations and footprint within the Nordic region, and beyond. In this interview, Rönnqvist shares his thoughts on the current state — and potential future innovations — within the Affinity insurance market.
How would you describe the Affinity market currently?
Previously, the UK was seen as the pioneer within Europe for this form of solutions, but nowadays clients and organisations in Sweden and the wider Nordic and Baltic regions have been taking advantage of the benefits Affinity insurance solutions can offer them. While this market segment has matured within some areas, there are still numerous untapped opportunities for clients and organisations to add value to their customers and members. Clients with large customer bases for example, should always consider Affinity solutions as an additional income source and a method to make clients ‘stickier’. We also see the potential for adding innovative insurance products to existing portfolios.
What are some of the challenges facing the Affinity market?
Products that have been around for many years, such as coverage for mobile devices, leased assets, payment protection, motor travel insurance, and others, are attractive propositions. But for some of these products, the market sees challenges in maintaining high take-up rates, as sales move more toward online distribution channels. Similarly, keeping retention levels elevated can be another issue, as customers have less money to spend during economically challenging times.
Furthermore, competition for fulfilling the end customers insurance needs and demands is increasing. We see IT vendors (insurtechs) entering the Affinity space, as well as, tech and SAAS companies — like Amazon or Meta — distributing embedded insurance packages.
Which areas of the Affinity insurance market have the most potential?
Historically, a large proportion of Affinity schemes have been set up in direct collaboration with the insurance carrier. Consequently, there may have been scope to improve both the customer experience and scheme outcomes.
Some aspects that could optimise Affinity schemes, include:
Enhanced distribution, to improve take-up rate at lower prices
Improved claims processes through technical innovations
Improved sponsors’ visibility of analytics and KPI data that typically only insurers have access to
Ability to engage with more compatible insurers
Can Affinity schemes be globalised?
In a more globalised world, clients tend to follow business trends and provide the same type of Affinity solutions they observe peers doing locally, but increasingly globally. Newer, scalable, and more cost-efficient technologies are enabling unified Affinity solutions for cross-border operations.
For multinationals operating in Sweden, Affinity insurance can be expanded to other European countries by taking advantage of the EU’s Insurance Distribution Directive (IDD), that enables freedom of service across the region. The same applies to the related insurance solutions. There are also methods to include other countries around the world, but this needs to be tested from a compliance and regulation perspective on a country-by-country basis.
What role can artificial intelligence (AI) play in Affinity solutions?
The market is receptive to introducing AI as this can enable automated distribution of products and policies, at a lower cost. For example, cost savings can be achieved through introducing automated systems that can eliminate burdensome, low qualified, highly repetitive tasks.
In the right combination with human qualified work, AI can swiftly deal with small value, high frequency jobs, like claims handling.
How can Lockton Sweden help?
Our focus is on improving the customer journey by embracing technological advancements. This enables us to transform product packaging and pricing, while improving distribution models and claims management. This is not only creating efficiencies, but enhancing the customer experience throughout the journey, helping to keep both the take-up and retention rates high. This goes both for the core product or service, as well as, the value-added insurance solution.
Insurance is a highly regulated business — especially when distributing to consumers. As the world's largest independent insurance brokerage, we can help clients navigate the legal and compliance issues surrounding this.
For further information, please contact:
Patrick Rönnqvist, Head of Affinity Lockton Sweden
E: patrick.ronnqvist@lockton.com