Zurich is prioritising its Asia Pacific SME growth efforts on underserved and developing markets, while recognising that these regions require a distinct approach compared to more developed markets, says Theo Pitsikas, the insurer’s recently announced Asia Pacific Head of SME.
Pitsikas stepped into this newly created role on 16 June, relocating from Australia to Singapore to do so. He has spent the past eight years as Zurich’s Head of SME for Australia, a market far more developed than the emerging economies the insurer is now targeting for expansion.
Zurich is focusing its efforts predominantly on Malaysia, Indonesia, and India—markets which have significant potential for growth in the SME segment.
Theo Pitsikas
APAC Head of SME at ZurichOnly 15% of more than 71 million micro, small and medium enterprises are insured against natural disasters in Southeast Asia, according to Marsh, despite the number and severity of major events growing each year,
Cognitive Market Research, a consultancy, predicts the market for SME insurance in Southeast Asia to grow at a compound annual growth rate of 8.5%, between now and 2031.
Last year Zurich acquired a 70% majority stake in Kotak Mahindra General Insurance Company, which has helped strengthen the Swiss insurer’s presence in India.
“Australia, New Zealand and Hong Kong are all highly competitive and highly developed from a distribution perspective, whether that’s in the digital or broker intermediated market,” says Pitsikas.
“Malaysia, Indonesia and India are very under-penetrated markets. Insurance products in these countries are offered to large corporates and the big-market segment, but SMEs are really overlooked. We can tap into this market.”
Tailoring products
Pitsikas argues that the problem often lies in how the products are designed.
“Many products in these markets are delivered with the big corporates in mind, and then offered to SME customers, who don’t feel that they need them,” he says. “Given the smaller premiums, agencies want to be able to sell products to SME customers quickly and efficiently, so the product needs to be specially tailored for these markets.”
The Zurich team are now working on a series of products specifically tailored for this market segment. For example, the insurer has just begun trialling a new micro insurance product in India, specifically designed for firms with assets of under 10 million rupees ($115,000).
“What we are trying to do in these markets is to offer SMEs tailored products that cover all the risks they face, rather than having to buy separate insurance. So we might offer cover for property, business interruption, cyber, burglary, money, glass, liability and professional indemnity, all embedded into a single product,” says Pitsikas.
Offering these kinds of catch-all products at a price smaller companies can afford requires a level of efficiency that is not there right now.
“In Australia we get over 50,000 quotes a month for SME products, and 70-80% of these are automated. In India, there is more work to do to get to a similar level of automation,” says Pitsikas.
Theo Pitsikas
APAC Head of SME at ZurichEfficiency and distribution
Given the small premiums available in these markets, keeping overheads to a minimum is vital. Introducing greater automation has an important role to play in this, says Pitsikas.
This means greater investment in technology, including wider use of artificial intelligence, although Pitsikas is quick to point out that this will not lead to reduced headcount. It will simply mean that some staff can be redeployed to where their skills can be better used, he says.
Reviewing the agency sales model is another of Pitsikas’ priorities. Unlike in Australia, where 80% of Zurich’s SME products are sold via brokers and other intermediaries, Malaysia and Indonesia rely heavily on agents.
“We need to look holistically at how these products are being sold and then internally how we are servicing them,” says Pitsikas.
For instance, in Malaysia, 90% of Zurich’s sales come from a small number of agents on the market.
“We are investing in tools and training to support our agents to engage with small business owners in a confident way, so we can expand our market reach,” says Pitsikas.
In Indonesia, Zurich has to compete with more than 160 other insurers, all vying for a slice of the SME pie.
“If we’re dealing with so many competitors, we need to ask the question: why should customers choose us? This comes down to relationships, the ease of making the sales transaction, the product coverage and the price. It’s not just one single thing that can make us the company of choice. It’s all of these things intertwined,” says Pitsikas.
Theo Pitsikas
APAC Head of SME at ZurichEmbedded insurance
Embedded insurance can also help establish new products in the market. Zurich plans to leverage its strategic relationship with Kotak Bank, which continues to own a minority stake in Kotak General Insurance, in order to sell new products through the bancassurance channel.
“If a small business is taking out a loan for a property, we can offer an insurance product at the same time. This is a great avenue for growth, and having the right digital platforms and relationships is essential to capitalising on it,” says Pitsikas.
He says that Zurich has been investing heavily in this area for the past few years, particularly with the Zurich Edge platform that was launched in 2023.
“This has enabled us to embed insurance seamlessly into digital partner ecosystems that customers engage with daily,” says Pitsikas.
