Amazon’s entry into motor insurance could prove ‘extra competition’ for insurers
Amazon is preparing to enter the motorcycle and car insurance market.
This is according to analytics and data company GlobalData, it said that Amazon’s entry into the market could help shift consumer expectations about buying insurance products from non-traditional players.
Most large global technology companies such as Google, Amazon and Facebook have expansive customer bases that can leverage selling insurance.
Although the Amazon is launching the product in India, GlobalData’s insurance analyst Ben Carey said that as it has an “enormous global reach” it could eventually make a s strong competitor for incumbents worldwide.
However rumours of Amazon creating a comparison website first surfaced back in September 2018, following this in November 2019 Amazon provided its Seattle-based employees with in-house health insurance.
Carey continued: “Motor insurance has been one of very few product lines relatively unaffected by Covid-19 so far, with claims largely declining, due to people travelling less. However, insurers will not welcome the extra competition as vehicle sales are expected to decline in the wake of the pandemic, as consumers continue to work from home.”
Meanwhile GlobalData’s 2019 UK Insurance Consumer Survey revealed that 62% would prefer not to buy insurance from Amazon signalling hesitation from consumers.
Other technology companies saw similar results for hesitancy with buying products directly from them – Google (63%), Apple (66%) and Facebook (78%).
Yasha Kuruvilla, insurance analyst at GlobalData, added: “Since customers are reluctant to purchase insurance from tech companies, partnering with a third-party provider is the better strategy, at least until they become recognised names in insurance.
“Amazon’s partnership with insurtech Acko rather than an incumbent also highlights the retailer’s desire to work with digital and agile companies. This will put added pressure on incumbents, not only due to the emergence of a new large entrant in the market, but also the need to digitalise if they want to work with tech companies in any other future insurance ventures.”
Amazon has been contacted for comment.