‘You would be a fool to ignore a business like Amazon’

Amazon moved into the UK home and contents insurance market with the launch of its price comparison service Amazon Insurance Store on 19 October. The tech giant also revealed that more is yet come.

The news had been rumoured since 2017, as Amazon started to advertise jobs to build an insurance team to disrupt the sector.

Now that it has been confirmed Peter Blanc, Aston Lark CEO, addressed whether Amazon poses serious competition.

He stressed: “You would be a fool to ignore a business like Amazon which is utterly ubiquitous and holds more data on the UK population than probably any other firm in history.

“I have no doubt that it will gain traction and it will certainly keep the rest of us on our toes!”

Database

Blanc added that Aston Lark’s data analytics team will be hard at work monitoring pricing in the sector to see what effect Amazon does eventually have on the market.

Zeina Fahra, SVP of experience design at digital product agency Somo, echoed Blanc on Amazon’s vast database.

Fahra warned: “Amazon has a leg up in that it already has a massive customer base it can target. On top of that, it knows a lot about its customers’ shopping habits and by extension their lives, which would make it easy to use the data it has to target insurance offers. For example, if someone purchases a new expensive gadget, Amazon can upsell contents insurance.”

Continuing: “The opportunities are endless if done right. Making it part of the regular shopping experience as an ‘add on’ in your cart can also take a lot of guesswork and hesitation out of the equation, making buying insurance a single click action.”

Advice

However, in the current economic climate with consumers thinking of cost-saving, advice provided by insurers and brokers remains crucial, the specialists flagged.

Blanc insisted: “Advice has never been more relevant or important.

“Price comparison sites present full information on insurance products, but that’s of no use whatsoever if many consumers either don’t read, or don’t understand, the differences between products. The net result is that far too many purchases are made where price is the overriding consideration - and in insurance as in many walks of life, cheap is not necessarily the best - and when you get it wrong with something as important as insurance, the outcomes can be devastating.”

Kelly Ogley, CEO of A-Plan, reiterated the need for advice: “We provide a totally different proposition, delivering advice for our clients, which is particularly important when we know a lot of people are underinsured and critically, we’re there to help our clients when they need us most, at the point of claim.”

Service

Similarly, Rob Palmer, franchise director at Coversure Insurance, asserted that being able to give advice during a time of uncertainty was important and that it was what will differentiate Coversure from Amazon.

Palmer summed up: “Amazon is never going to be able to do what we do which is engage with our clients.”

Insurance Age contacted several other brokers to see how they feel about Amazon entering the insurance space, but intriguingly there was a reluctance to comment.

Fahra stated that PWCs need to find a way to provide a valuable service to customers.

She explained: “As we’ve seen with the energy crisis, PCWs can easily become irrelevant in certain circumstances that are beyond their control. The way to avoid that is to ensure they’re not only offering best-in-class digital experiences, but also continuously evaluating their business model and what services customers would value from them. As it stands they’re all interchangeable and used often on a single-as-needed basis.”

Complicated product

Blanc concluded that he welcomed Amazon as competition but believes that insurance is a complicated product that is misunderstood.

He ended: “All the surveys show that customers don’t understand the cover that they buy, and all too often only find out what they have bought when a claim occurs - the so called ‘expectation gap’.”

Fahra stressed that consumers can suffer from choice paralysis when presented with lots of different insurance options, specifically when choices are often similar.

“The flip side of the massive marketplace is that people aren’t sure what results to trust on Amazon,” she added. “Why are they being shown those choices versus others? Is it a paid placement? People may distrust an insurance offering from Amazon if they’re unclear on why they are being presented with that option.”

Amazon stated at launch that the comparison website will be available by the end of the year.

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