Why Amazon insurance is a prime proposition

"The young are going to be more likely to switch their allegiance, but in the short term, this will be based on specific coverage that meets their needs", rather than simply switching from a traditional to a Big Tech provider. 

A reluctance to innovate or create products that cater to the needs of different demographics is a barrier. Dave Priestley

Dave Priestley, chief digital officer at Vitality, believes there is no particular "generational" pattern when it comes to clients being lured away from traditional providers, because the practice of buying insurance is far more personal and bespoke than picking a product off the virtual shelf. 

Mr Priestley elaborates: "It may seem switching has a generational pattern, but this may be masking the underlying propensity that to switch insurer on a regular basis is more associated with the perceived value of products.

"The reality may be that many insurance products are not designed to build loyalty with younger generations, either because they are not relevant enough in the benefits they offer, or do not meet their expectations in terms of customer experience."

Ian McKenna, director at Finance & Technology Research Centre (F&TRC), agrees there's no set generational pattern when it comes to switching insurance providers. 

According to Mr McKenna: "I don't believe any generation is loyal to traditional insurers; currently, they don't have any alternatives. It is not like the industry is held in high regard by most customers."

Catching up

Big Tech platforms are posing a threat to traditional insurance manufacturers and to distributors such as brokers and financial advisers. The obvious advantages to the likes of Amazon include access to vast, detailed data that enables them to profile and target customers in granular detail - something far beyond the capabilities of even a global insurer or a national insurance advisory network.

Moreover, Amazon's relationship with existing customers gives it a lead in to potentially millions of new customers.

Yet, according to Mr Priestley, traditional insurers are not ignoring the challenges presented by Big Tech and large-scale platforms such as Amazon. It's just they may have been "slower to adopt some technologies", but he does not think insurers have been "resting on their laurels".

He explains: "Many providers have developed highly sophisticated data analytics and modelling expertise, which enables them to accurately price and target products in very complex and competitive markets, which operate with thin margins. This is hard to replicate quickly."

Moreover, Steve Andrews, head of managed services at Focus Solutions, says Big Tech can really gain an advantage in bringing their "knowledge and experience" into new markets. 

Mr Andrews states: "Firms such as Amazon have not only become global superpowers; they have changed consumer buying habits forever.