No one can dispute the success of Amazon in the UK as a digital retailer, and many insurers have held it in high esteem as a company to emulate in terms of innovation and overall service proposition. But now Amazon poses a real threat to UK insurers.
Amazon is currently recruiting insurance professionals in London to join a new team looking to disrupt the insurance market in the UK, Germany, France, Italy and Spain. This should have UK insurers worried for a number of reasons:
- Amazon has a positive reputation for putting customers’ needs at the heart of its propositions. Amazon offers clear, transparent services such as the ability to track a package, next-day delivery, a clear returns policy and customer reviews on products, providing clear communication to customers throughout the purchasing journey. This level of trust and transparency is something the insurance industry has really struggled with, especially after the likes of the PPI scandal. According to the GlobalData 2017 General Insurance Survey, 18% of consumers would buy their motor or home insurance from Amazon, highlighting the potential for the brand to cross-sell into insurance and take market share from established players.
- Amazon has established itself as a key service provider for households. Its Prime service, promising fast delivery as well as offering a TV channel and movie service, makes for a popular subscription model. We’re already seeing a number of new propositions moving away from annual renewal to a monthly subscription basis, which would fit well with Amazon’s current business model.
- In addition, its investment in technology and innovation has brought households the Echo and Dot, voice-activated speakers that use artificial intelligence to support everyday family needs. As we move nearer to an age of smart, connected homes, Amazon is well placed to lead the way. This will also position it well for providing insurance needs, as tech in the home will soon define the insurance requirements of an individual household. This close and interactive relationship is a long way from the limited annual renewal or claim process touchpoints insurers work to.
While UK insurers are investing in tech and providing digital services, the majority are light years behind Amazon. If insurers aren’t careful, they may be pushed out of having a direct relationship with customers and be relegated to the role of a price-driven risk carrier at the back-end (assuming Amazon doesn’t want to hold the risk too). Either way, this is a sure sign disruption is on the way for the UK insurance market.
– This article is reproduced with kind permission from GlobalData Financial Services. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Photo by Hadrian, Shutterstock.com