Amazon’s latest moves suggest that it is looking to crack the insurance market.
Most recently, the online behemoth has invested $12m in digital insurance start-up Acko Technologies.
Before that, reports circulated that Amazon was seeking to set up a motor MGA with UK partners and was hiring people with insurance skills in London.
The industry needs to be prepared for an entrance by Amazon, which could happen within the next 12 to 18 months, according to Altus consulting director of general insurance Mark Andrews.
The industry must act
Insurers need to be wooing the giant, says Andrews, and proving that they are worth partnering up with. Otherwise, they need to be working on a compelling digital proposition to convince customers that they are still king.
Amazon probably won’t foray into the mass market yet, says Andrews. Mass-market motor, in particular, is probably off the cards for now. However, if it doesn’t target extended warranty or product insurance next with a slicker question set, Andrews says it could aim to permeate the home market.
Amazon knows what its customers buy and own and where they live, in addition to having a “compelling” proposition in connected homes.
“That’s possibly a more exciting place to enter the market than making a new extended warranty product and selling it quicker,” says Andrews. He continues: “They know everything about the customer. They know what the customer owns, because they probably bought it from Amazon. “I think they know enough about their customers to create a pretty dynamic home insurance product.”
Third of customers would buy insurance from Apple or Amazon
Nearly a third of customers would purchase insurance from ‘big tech’ firms such as Amazon and Apple, according to this year’s World Insurance Report from Capgemini and Efma.
This marks a sharp increase of 69% since 2015, which the report said was driven by customer dissatisfaction with traditional providers and tech-savvy customers.
As ‘big techs’ start to enter the financial services space, a warning was sounded that firms like Apple and Amazon would have “certain advantages” within the insurance sector through tech-based disruptive models.