The one online retailer giant that many other companies fear in terms of competition would have to be Amazon. What started as a simple online bookstore has branched out into various industries. Now the company has made a global name for themselves and is a fierce competitor with other retail giants such as Target and Walmart. These days we can get so much from Amazon to help us with our everyday lives. We can order household necessities within seconds and enjoy streaming music or shows with a Prime membership. It seems that Amazon has a solution for everything we do these days, which is why it is no big surprise that the online retail giant has now set their sights on another necessity of life, the insurance industry. And that move has many insurance brokers concerned.
What does it mean to insurance brokers for a company as big as Amazon to enter the insurance industry? Will this change the way that customers purchase their insurance coverage moving forward? And how will brokers respond to these changes that are sure to occur much sooner than later?
What is Amazon Insurance?
In 2017 Amazon made the news when they were spotted looking into the insurance markets in Germany, France, and the U.K. Although the company did not make any formal announcements at the time concerning their goals for the insurance market, speculation of what they will do and how they will do it has been circulating ever since.
Amazon’s plans to venture into the insurance industry have concerned many P&C insurance brokers in particular. That’s because the transformation into the digital world for the insurance industry has not been as fast as anticipated. According to recent reports, 53% of P&C executives stated that their sector was either significantly or moderately behind others when it came to digitalization.
In 2018, a page on Amazon’s website was created that talked about potential health and auto insurance plans. However, these sections do not offer any products as of yet. At this time, the only insurance offered by Amazon is Amazon Protect. That is the company’s warranty service that protects purchases against any breakdown, theft, or accidental damage.
Should Insurance Brokers Be Concerned About this New Competitor?
It is no surprise that insurance brokers are concerned about the possibility of Amazon coverage. Based on their strong market presence and their experience with the digital world, it could be troublesome if they begin offering insurance to customers.
There is speculation that the company will soon be investing around $15 million into Acko, an Indian company that offers online-only insurance products. There are also rumors that Amazon may take a chance with health insurance offerings. As of January 2018, Amazon, JPMorgan Chase, and Berkshire Hathaway announced they were making plans to partner to address their employees’ health care options.
Will Amazon Be an Underwriter?
Many insurance brokers are questioning if Amazon will be a competitor that actually covers their risks. Or if they will simply continue with their current strategy. With their recent product insurance coverage, the actual coverage is not taken care of by Amazon itself, but instead, it is underwritten by the Warranty Group. The fact that Amazon users can receive insurance products and Amazon will profit without ever underwriting a single policy could be a fierce competitor for all legacy insurance providers.
What Can Insurance Brokers Do to Prepare?
Regardless of what route Amazon decides to take when they delve into the insurance industry, insurance brokers should take notice and prepare themselves for the competition that lies ahead. It would be in the best interest of all insurance companies to move customer-focused digitalization to the forefront of their company’s improvement plans.
Here are a couple ways insurance brokers can prepare for Amazon’s move to the insurance industry.
Improve Communication for the Digital World
Customers looking for insurance do not always buy their policies online. But they usually prefer to have the option to do so. Having a system that doesn’t make it simple and easy to purchase a policy or even compare options online could cause your potential customers to shop elsewhere for their insurance needs.
Promote Better Customer Personalization Using Data
Amazon has always been a leader when it comes to collecting and using customer data to their advantage. However, legacy insurers also have the benefit of the strong relationships they’ve created with existing customers. This approach can make it easier to maintain customer data and upsell.
The possibility of Amazon entering the insurance industry is highly likely. And that is something that should concern all insurance brokers. But making improvements to your company and bringing it into the digital age will help you to meet Amazon and other strong insurance competitors head-on in the battle to provide the best possible coverage to customers throughout the world.