Why Amazon insurance is a prime proposition

Our research specifically shows a general willingness among the younger population, who are more tech savvy, to purchase insurance from Big Tech. Seth Rachlin

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.

This presents an opportunity and a threat: a chance for insurers to reach more people with its branding and product information - and a threat to brokers who know products and policies inside out. "Amazon would effectively become the broker. The ability of the company to take 10 per cent or 15 per cent of every dollar of premium would be attractive," says Mr Rachlin.

"Products tend to be fairly similar between companies, particularly in the life insurance space, so insurers need to leverage technology to get distribution.

"Amazon can do this, and it can do this cleverly - what people buy on Amazon could help it predict where people are in their life stage, so the data could predict what sort of insurance a person might need."

For example, if someone suddenly starts buying baby clothes, cots and toys, Amazon could suggest life insurance, income protection or critical illness policies that include children's insurance cover. 

He pointed to retailer Target in the US, which built in predictive models so that women who began stocking up on pre-natal vitamins online would start to see adverts for baby products.

Generational divide

But who would buy from the likes of Amazon?

There is a perception that millennials and the so-called Generation Z - those aged 18 to 24 - are the most likely consumer audience for the likes of Amazon, eBay and other sites, where the exchange of goods and services is embedded into their psyche. 

Mr Rachlin comments: "Our research specifically shows a general willingness among the younger population, who are more tech savvy, to purchase insurance from Big Tech." 

Dave Miller, executive general manager of sourcing at Iress, tends to agree. "The common preconception is that younger generations are likely to show the least amount of loyalty to traditional insurers. 

"The prominence of major technology companies among younger, digital consumers, means these may be more familiar, engaged and trusting of these brands than they will be with financial institutions".

But this is not the full picture, he concedes: "I would argue this is something the insurers are tackling head-on, and the outlook may be more positive than some would have us believe."

Charlie MacEwan, corporate communications director for specialist private medical insurance provider WPA, says: "Insurance is a financial arrangement based entirely on trust.