The recent news that Amazon is contemplating offering insurance in the UK as the latest addition to its portfolio may have cast a chill over the price comparison websites. Arguably, this should not have come as a surprise to the stock market in August when prices temporarily dropped – Amazon has been actively recruiting insurance experts for the last year.
This isn’t Amazon’s ‘first rodeo’ in insurance. Back in 2016, the Amazon Protect product was launched in the UK, though it had been selling extended warranty as far back as 2007. Further afield in India, car and bike insurance products are being sold through Amazon following its investment into the digital insurance startup, Acko. Amazon is well respected globally in retail, fulfilment, streaming entertainment, technology innovation and cloud services. So, the idea that it could launch a price comparison service in the UK (as has been reported) to an existing and loyal bunch of customers is not at all far-fetched.
In this new potential landscape, who are the winners and losers? Apart from Amazon itself, the insurance carriers may well be upbeat about the prospect – after all this represents a new and interesting channel to market. Where insurers may have seen their marketing databases decimated following GDPR, Amazon will have ongoing engagement with a huge audience and potentially more favourable marketing preferences.
Those who may feel the chill first, however, are not just the aggregators but also the brokers and intermediaries, those who have been the traditional routes to market that insurers have relied upon.
Given all this, how can brokers and their peers stand up to the threat of a technical giant with a loyal customer base and the data and reach to take a large slice of the market?
To understand this, we need to look at where Amazon is really strong.
Firstly, Amazon, with its huge data resources, excels in looking at people’s buying behaviours to predict what someone is likely to want next and present it to them.
Secondly, when things go wrong, Amazon sorts it all out with minimum fuss to the customer. Certainly, this instills trust in them as a provider.
But the reality is that the thought processes around the selection of insurance products are different from buying household goods or tech or food. Recent psychometric research conducted by psychometrics consultancy CrowdCat dug deeply into how consumers make insurance choices.
Results revealed in 2019 proved that it isn’t only trust in a provider that determines whether someone will buy your product. Self-trust – the trust we have in our own ability to make a policy choice – is critically important here.CrowdCat Research report into purchasing insurance products – January 2019
It’s essential to realise that individuals thought processes around insurance policy selection can’t be reverse-engineered (even by Amazon) from looking at people’s behavioural data. To access rich information such as why people think the way they do and how you influence their choices requires a radically different approach, particularly when you are dealing with hundreds of thousands of prospects, or more.
Smaller brokers who have strong and authentic relationships with their customers are well-positioned to weather the impending storm.
For larger organisations, psychometrics are the way forward in accessing how people really think at scale.
Because if Amazon is about to disrupt the insurance market, the winners will need the best available expertise and data to be ever closer to to their customers, with the fullest understanding their thinking and motivations. Critically informing everything from brand strategy to campaigns and ads, the ability to act and deploy the right data will determine who will survive the inevitable revolution.