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Will Amazon shake up the insurance industry?

  • Philippe Surber

Google, Apple and Facebook: All of them already offer individual insurance products or they are working on pilot projects. Now it seems that Amazon will join the market.

Amazon is placing job adverts for insurance professionals based in London, preferably speaking German, French or Spanish. They are looking for insurance experts who «wish to take part in the launch of a new company», «Süddeutsche Zeitung» quotes the job advert. [1] Amazon wants to re-define the insurance product experience and «disrupt the way insurance policies are acquired and delivered».

Insurance products for high-quality equipment have been generating high margins. This has been the experience of Apple with its Apple-Care products over the last few years. Their services business, within which these insurance products are offered, was Apple’s second largest revenue driver in financial year 2017, right after the iPhone.

Amazon’s market debut

And there follows Amazon: «We have ambitious plans to significantly grow operations in our current markets and create new, innovative products», added the retail giant in its job advert.

Customer proximity as a competitive factor

Being close to the customer is a key competitive factor in the insurance sector, all along the information- and decision-making process. The inventor of «Customer who bought X also bought Y» has been in the lead in that area for a long time. The «Süddeutsche Zeitung» quotes Patricia Davies, the leading insurance analyst with London analytics company called Global Data, who said: «Insurers are investing in technology and digital services but the majority are light years behind Amazon».

Insurers are investing in technology and digital services, but the majority are light years behind Amazon.

Startups, too, have been trying for years to take away business from established insurance companies, by employing state-of-the art business models and business offerings. The trend is to move away from classic home insurance to individual product insurance policies: for your mountain bike, an expensive smartphone or a camera. The German Munich Re and the Swiss Baloise Versicherung both invested this year in the California-based start-up called Trov, an on-demand insurance that can be turned on and off exactly when needed.

Do disruptive business models capture customers’ hearts?

Insurers who best serve their clients will be the winners of the structural change. The challenge for traditional insurers, however, is that the rules of the game – that is customer proximity and how to achieve it – will be completely redefined with the entry of new players.

The new Insurance Report from Unic

In the new Insurance Report 2017/18, Unic took a closer look at the traditional and disruptive business models of insurance companies. How close to the customer are the traditional insurers in the digital world? What new rules are set by the disruptors in the area of customer proximity?


[1] All quotes come from «Süddeutsche Zeitung»: «Versichert von Amazon»