With the recent launch of the Amazon Insurance Store, Amazon could become a “serious threat” to the ‘big four’ price comparison sites of household insurance – Compare the Market, Go Compare, MoneySuperMaket, and Confused.com – ruling the UK market, according to GlobalData.
Amazon’s reputation for digital expertise and value in the UK, alongside significant brand recognition – with a total of around 12 million Prime members – is the reason why Ben Carey-Evans, Senior Insurance Analyst at GlobalData believes the technology giant could offer a serious threat and significantly disrupt a model that has long been dominated by the ‘big four’.
Carey-Evans said: “GlobalData’s Consumer Survey* data shows that 29.4% of UK consumers bought household insurance through price comparison sites in the UK in 2021. Of those, 95.7% percentage bought their insurance through one of the ‘big four’. This highlights the extent of their dominance in the market, and this is the model Amazon looks well placed to disrupt.
“Our 2021 UK Insurance Consumer Survey found that 19.7% of UK consumers were willing to purchase home insurance from Amazon. This shows a sizeable proportion of consumers were open to buying insurance through Amazon before it even offered this service.”
He added: “The current cost-of-living crisis will make consumers focus heavily on price and value when choosing policies. However, given its reputation for low prices, alongside its presence within UK households, and its digital expertise, it is likely to have an immediate impact on the market and become the fifth key player.”
Rory Yates, SVP of Corporate Strategy, Global at EIS, a digital platform provider for the insurance industry, also shares GlobalData’s view.
He believes Amazon’s MO will lead the company to success and to eventually dominate the market, opening the door to other players, like Google, to follow a similar path.
Yates commented: “Insurance is a market saturated with comparison applications, so why get involved? While there are opportunities for insurers, perhaps where they should focus their attention is the looming threat Amazon’s move represents.
“Amazon wants to own the relationship with the customer and be able to act on it. Their MO is to launch, learn, and take over, as they have with healthcare. Amazon is exceptional in acting on its knowledge to control the customer. They will now be mining this new data and mapping it back to their existing data sets to identify structural weaknesses and understand how to leverage this insight to infiltrate, penetrate, and dominate the market.
“If Amazon is successful, then Google and the other significant ecosystem drivers will follow. This is big tech moving to insurance. It won’t be simple, and insurers still have time to take back control. The question is, will they?”
Amazon Insurance Store launched on October 19. For the initial launch, Amazon partnered with Ageas UK, Co-op, and LV= General Insurance. According to the announcement, the company plans to add more insurers to the Amazon Insurance Store early next year, giving customers even more selection.
