Reports saying Amazon ’will offer home insurance’ hits insurers’ share prices

Share prices in leading home insurers fell yesterday after reports suggested Amazon is planning a move into the sector.

Following The Information’s article, which claimed Amazon was contemplating offering home insurance as an offshoot of its work developing interconnected devices, from around 2.30pm onwards the dramatic effect of the story became apparent.

Within half an hour Aviva shares fell by 0.42%, Admiral fell 0.75% and in Direct Line fell by 0.86%.

Across a two-hour stretch, AXA’s share prices fell by 1.11% and Munich Re’s fell 0.73%.

The Amazon effect, where share prices are sent plummeting at the mere suggestion the firm are entering a new market has been seen several times before.

American delivery companies FedEx and UPS saw their shares fall on the announcement of Amazon’s new package-delivery service.

Similar trends were seen in the healthcare, grocery and sports retail markets on Amazon’s announcement of various acquisitions or partnerships.

This effect has been attributed to traders becoming fearful of the disruptive effect a rival with such a large logistical network could have on the market.