One in three SMEs in Switzerland is insured with AXA, making it one of the leading insurance providers for business clients in Switzerland. Dieter Gosteli has led the Corporates division since 2015 and is well versed in the risks that small and medium-sized Swiss exporters have to grapple with.
Mature markets – less protection needed? Far from it
Legal certainty, transparency, an easily accessible culture – these are just some of the advantages of mature markets for Swiss SMEs. When it comes to the risks for which companies need to be insured, however, the logic is rather different.
Your risk depends on what you actually do
summarizes Dieter Gosteli.
In mature markets, many companies are primarily active using technology-intensive products, he points out. Furthermore, he continues, they tend to set up their own offices or even production sites in these countries because of their major significance for the Swiss export economy.
Yet the more capital you invest, the greater your risk – at a high-tech production site, for example, there are considerable tangible assets, whose protection may well be crucial to a company’s very existence.
By contrast, Swiss SMEs are frequently less intensively involved in developing and emerging countries, he continues. Here, in turn, the financial risks can be greater, for example when a customer doesn’t pay up.
The protection package required thus hinges on the company’s international business model, and less on the export destination per se, so that the most important products that exporting business customers obtain from AXA insurance are therefore property and liability solutions, he explains. The latter is particularly important in the USA, says Gosteli, adding, “this is a specific feature among mature markets.”
Risk analysis and special protection for beginners and small firms
Companies with less experience in export and smaller firms should first carry out a comprehensive risk analysis, Gosteli advises. “We work together with our clients to review the risks that are really fundamental for them and the major losses that might occur, or that a company might be able to absorb by itself if need be”, he says.
Depending on the area of activity, smaller companies don’t necessarily have to shoulder lesser risks than bigger ones:
If you produce medical implants, for example, you might be faced with horrific claims, regardless of how many staff you have or your level of turnover.
Alongside the classic insurance policies for property and liability, Gosteli recommends that smaller firms look at taking out credit insurance. When there is less liquidity available, shortfalls in payments can quickly become a serious problem, he says.
The same goes for legal disputes. SMEs are generally less able to afford comprehensive legal help because of their more limited legal capacity or lack of available finance. Gosteli: “With legal costs insurance, we can provide support here or cover the costs in extreme cases.”
Mature markets still important for exporters – start discussions early
Due to AXA’s high market share among Swiss corporate customers, Gosteli has a good overview of the markets in which local exporters operate – and he’s convinced that mature markets remain extremely important. “That’s where it all happens!”, he says. It’s important to bear in mind, he continues:
The growth rates of an economy don’t tell us anything about the potential business volumes.
"A developing country at a low level might be able to achieve enormous growth rates, but its business potential still remains low overall – and vice versa: It may be the case that growth rates are low in mature markets, but this growth is still quite large from a quantitative perspective.”
Of course, this doesn’t mean that new emerging markets should be discounted, he explains: They might offer an opportunity to compensate for political uncertainties such as Brexit, for example, which will undoubtedly not leave the British economy unscathed.
Many economists already consider certain parts of the Chinese economy to be mature markets, but from an insurance perspective, Gosteli affirms, the country has not reached that point yet. “Insurance is locally not yet as developed as what we have in Europe, for example. For us, compiling a joint insurance solution for a company with our local partners involves significantly more administrative effort than doing so in Germany or France.”
Regardless of the choice of market, on a more general level, Gosteli recommends talking to experts as early as possible with the aim of safeguarding against fundamental risks and preparing thoroughly to make the move into a foreign market. This way, companies can achieve success in mature and emerging markets alike.
Within Switzerland, around two million clients place their trust in AXA. They rely on the company’s experience and the advice it provides for personal, property, liability, and life insurance, as well as for healthcare provision and occupational pension funds. The leading Swiss insurer is a dynamic company with an ambitious vision: to give its clients freedom through financial security and thus to enable them to live a carefree life – with simple, digital processes and innovative products and services relating to important areas of life such as mobility, home, and entrepreneurship. To this end, it employs around 4,400 staff plus the 2,800 colleagues in the nation’s biggest sales network with more than 300 branches. AXA Switzerland is part of the AXA Group and achieved a transaction volume of CHF 11 billion in 2018.