The UK provides a robust testing environment to test an insurance task in line with strict regulation and insurance impregnation. Its customers and private line insurers are digital-first, but while that might seem like a net benefit to any new online insurance business, a caveat that may also be at the heart of Amazon’s failure in this area.
Personal insurance in the UK is governed by Internet Price Comparison Sites (PCWs), which have offers from over a hundred insurers.
Stop the man or woman on an American street and ask them which insurers they know and (assuming they don’t express their explicit anger at skyrocketing homeowners insurance costs), you could respond to Allstate, GEICO, State Farm, or Progressive.
Try the same thing in the UK and an insurance company, or even a broker, is possibly not even among the most sensible on the list (you still feel some anger about emerging premiums).
PCWs pay big bucks to stay front of mind. They are an advertising machine.
Their presence has pushed the nation’s dwindling 2,000 odd broking businesses to ignore the online model at their peril. To put their impact into perspective, just one big branch-led outfit, the Howden business formerly known as A-Plan, is still standing. Other large standard personal lines brokers have flocked online, to do business on aggregators.
The Amazon brokers’ game, with a panel of four insurers, has been likened to a “mini-PCW. “It’s a flattering comparison for a big tech beast.
Mark Andrews, insurance director at consulting firm Altus’ UK branch, sums it up well: “[Amazon] was just another panel broker trying to compete in a very busy personal lines market.”
The U. S. market has comparison sites, but it has no problem with festivals between online aggregators. What it does have is an area for big tech to come in and create one. That would be a cause for concern.
In an agent-heavy region with a limited online aggregator presence, an insurer-backed Amazon play has the potential to upend the market.
Recent speculation has abounded that GEICO is looking to work with independent agents. Imagine the impact if it, and others, partnered with an Amazon-type ‘agency’. Rather than competing with the big insurance fish for airtime in consumers’ minds, Amazon could be right up there with them.
Now imagine if Amazon also used its taxing power to launch an ad ambush instead of waiting for consumers to join in. What if it incorporated smart technologies to help other people improve the safety of their homes and reduce costs, as viewers like Andrews expected?in the UK.
There are a lot of ‘ifs’ here. And rival Google has come in and failed before, though some of that may be down to timing.
Another huge ‘if’: Would carriers want to partner with a tech behemoth’s comparison service, particularly considering the ‘race to the bottom’ that many believe PCWs have driven in the UK?
That said, if Amazon pulls out all the stops and gets a partner, others might feel like they still have no other option to join. And Google has courted insurers in the past.
Amazon’s UK insurance partners will have seen its addition to their panel as a coup, even if they were ultimately charged dearly when the lights went out.
There’s also the factor of regulation, with a voluminous and costly state-by-state approach.
With the new landlord fees for many, consumers may not like what they see on Amazon’s platform and this can also backfire. Could they implement a FAIR plan? But while insurers are tightening their belts, other people are frustrated with their agents and insurers and would possibly claim (at least the illusion of) choosing.
If it sticks to a middleman role, the effect of natural errors and inflation claims shouldn’t worry Amazon.
It is expected that human agents will continue to be perceived as more reliable referral resources than a website. Keep in mind, though, that it remains to be seen what kind of generative AI interaction like ChatGPT can also offer, even if that would make you cringe with responsibility. And even if officers rely on empathy, consumers may not know the price of empathy until the time of the report.
The biggest “if” remains whether Amazon, Google, or their main tech competitor would price a safe bet relative to brighter expansion opportunities, such as existing businesses in the cloud, artificial intelligence, and ad-supported streaming.
Perhaps this illustrates how he views insurance on its grand scale: when news broke of the closure of Amazon’s insurance store in the UK, rumors surfaced that Prime was about to spend a hundred million dollars on a series featuring YouTuber MrBeast.
But never say never. Amazon’s insurance business in the U. K. would have arguably gone under, but a U. S. freed from the burden of PCW may also be a hornier target. There is little room for complacency.
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