Why Amazon insurance is a prime proposition

  • To understand what big tech companies are considering in the realm of insurance.
  • To ascertain the challenges for providers and advisers.
  • To learn ways to enhance brokers' offerings to compete against the likes of Amazon.
Why Amazon insurance is a prime proposition

Imagine you are sitting comfortably on your Chesterfield, remote in hand, scrolling through your Amazon Prime subscription package.

Along with the boxsets on offer are nudges about recent purchases made on the shopping site; flicking through these you then come across reminders that your home insurance and income protection policies are up for renewal.

With a few clicks of the remote, you can do a price comparison of providers’ insurance policies on your 52” LED, find the best quote and the most appropriate policy for your circumstances, and within a few minutes, you have renewed your insurance painlessly.

This isn’t some utopia for the TV Generation or the chronically lazy; this is the very near future, as Amazon has already expressed interest in entering the insurance space.

And those who think such digitisation of insurance won’t catch on – because insurance, as we are always told, is sold, not bought – might need to think again.

According to the recent Capgemini World Insurance Report 2018, 29.5 per cent of consumers would be open to purchasing insurance from Big Tech firms, such as Apple or Amazon. 

While this figure may seem small, this is already a 69 per cent increase on those who were prepared to buy insurance from Big Tech when polled in 2015; the figure is rising, not shrinking.

In August, that giant of technological development, Google, announced a deal to help provide quality, affordable healthcare to Americans, with news that Google’s parent firm Alphabet has invested $375m (£295m) into insurance provider Oscar Health.

This followed an initial $165m (£129m) round of funding earlier this year. In addition, Google executive Salar Kamangar is set to join the board of Oscar Health, which was founded in 2012.

Making a play

What does this mean for traditional insurers? According to Seth Rachlin, executive vice-president, P&C, insurance lead at Capgemini, it is time to shape up or be shipped out: consumer brands like Amazon know how to capture and keep their customers, and Google knows how to create innovative technology to enable people to get the insurance they need.

He explains: “Amazon is well-positioned to enter the insurance market. There is a lot of room for continued innovation and we are already seeing the erosion of the traditional broker market. 

"Because of Amazon's existing captive market, they have relationships with millions and millions of customers, who interact daily with the platform."

While people have been sceptical of Amazon's purported entry into the market, given that it would not want to become an insurance company per se, or to engage in underwriting risk, there is a "strong opportunity" for Amazon on the distribution side. 

This means it could select certain insurance providers, tailored for each domestic market in which it operates, to feature on its platform, giving consumers the option to choose from policies and providers, just as they can choose from hoodies and lawnmowers.