Price comparison site share prices fall after Amazon is revealed to be talking to insurers

Shares in UK price comparison websites fell after tech giant Amazon was revealed to be in talks with insurers about starting its own aggregator.

In early trading on Friday, shares were down 4.3% from Wednesday’s close to £2.85, while GoCompare fell 3.4% to £1.11.

Admiral, which owns, and which posted positive first half results on Wednesday was down only 0.7% to £20.47 over the same period.

Amazon is in talks with some of Europe’s biggest insurers about setting up a UK price comparison website, according to a Reuters report yesterday.

Google scrapped its own price comparison site, Compare in 2016 after only four years.

Analysts said Amazon could undercut the fees current aggregators charge insurers for policy leads.

“Typically insurers will pay £50 to £60 for a car insurance policy if someone takes it out via a price comparison website. They could pitch to insurers by charging, say, half of that,” The Financial Times quoted RBC Capital Markets analyst Kamran Hossain as saying.

“There would be a natural flow towards an Amazon website. I imagine [insurers] would be really open to it.”

Danielle Cripps, insurance analyst at GlobalData thought that insurers could welcome Amazon’s entry into the insurance marketplace.

‘‘Amazon has so far been seen as a threat and source of competition by UK insurers, but this move would see the company become a distribution business partner to the sector.”

She said the aggregator market has lacked innovation, and Amazon could “bring something new”.

“Some insurers could seek to build their relationship further, adding insurance skills to Amazon Alexa or using Amazon’s marketplace of products such as smart home devices or wearables to further their product offerings,” she said.

Guidewire chief marketing officer Brian Desmond agreed that insurers should welcome Amazon’s entry into the market, but he warned that they shouldn’t be complacent. 

”Amazon is able to gain insight into consumer and product profitability – adjusting its product line according to real time analysis. Sharing this with insurers is hugely valuable,” he said. 

But insurers should be alert for Amazon encroaching on their markets. 

“Assume that Amazon will do the thing that you find most terrifying,” he said.

”Amazon will try to eat your lunch. If you sell motor and home insurance, assume that Amazon will compete directly in your market, at point of sale and throughout the lifecycle, in the next few years. And then use your assumption to define and implement your business strategy with urgency.”