the north face tops Amazon considers entering insurtech market
Speculation about Amazon targeting the insurance sector come from industry insiders like Digital insurance. Experts suggest the possibility of the Alexa voice assistant searching for insurance policies across different providers, presenting a competitive threat to insurance brokers.
The insurance news follows speculation in October 2017 that Amazon appears set to enter the world of pharmaceutical products distribution, offering legitimate medicines by online ordering (see Digital Journal’s article “Amazon looks set to enter pharmacy market”). However, developments in pharmaceuticals have yet to be announced.
Amazon has already begun offering some types of insurance policies. This is through ‘Amazon Protect’, a product that provides extensions to manufacturers’ warranties, insuring against accidental damage, breakdown and theft. With this offering, when buying appliances like washing machines, mobile phones, tablets, televisions, kitchen appliances, and other electronic goods, shoppers are prompted if they want to add Amazon Protect coverage to their shopping basket at the time of checkout.
Amazon is expected to soon go beyond this product related offering. The company has begun advertising in the European Union product for people with insurance and insurtech experience. The online retailer states it is “launching a new business” and will be “creating a new palette of services.”
Moreover, Insurance Business magazine has found a website called “Amazon Insurance”, which contains a Financial Services section which has an Auto Insurance and Health Insurance channel, albeit with no products listed.
Insurance companies are likely to be worried. Quoted by The Actuary, GlobalData financial services analyst, Patricia Davies states: “Amazon has a positive reputation for putting customers’ needs at the heart of its propositions, something the insurance industry has really struggled with, especially after the PPI scandal.” The PPI issue is a reference to ‘payment protection insurance’, an insurance product that enables consumers to ensure repayment of credit if the borrower dies, becomes ill or disabled, loses a job, and so on. In many countries PPI was found to have been ‘mis sold’ leading to many financial services providers being required to re pay consumers the cost of the product.
Digital Insurance notes that, in response to the disruption that Amazon could cause to the insurance market many major players will offer to work with Amazon rather than to compete with it.