According to reports from data and analytics company GlobalData, tech giant Amazon is planning to to enter into the car and motorcycle insurance market.
The news comes as an unwelcome threat to other insurers who have had to endure a challenging year throughout the COVID-19 pandemic.
Amazon’s entry into the insurance market will help shift consumer expectations about buying insurance products from non-traditional players.
Amazon aren’t alone since other large global tech companies such as Google, Amazon, and Facebook also have an enormous customer base, of which they can leverage when selling insurance.
Regardless of their current customer base, a survey shows that people are still reluctant to buy from them.
GlobalData’s 2019 UK Insurance Consumer Survey found that 62% of consumers would prefer not to purchase an insurance product from Amazon. Likewise, 63%, 66%, and 78% of consumers would not purchase insurance from Google, Apple and Facebook, respectively.
Ben Carey-Evans, Insurance Analyst at GlobalData, commented: “The tech giant is launching it in India, but has an enormous global reach, and could eventually make it a strong competitor for incumbents around the world.
“Motor insurance has been one of very few product lines relatively unaffected by COVID-19 so far, with claims largely declining, due to people traveling less. However, insurers will not welcome the extra competition as vehicle sales are expected to decline in the wake of the pandemic, as consumers continue to work from home.”
Yasha Kuruvilla, Insurance Analyst at GlobalData, added: “Since customers are reluctant to purchase insurance from tech companies, partnering with a third-party provider is the better strategy, at least until they become recognized names in insurance.
“Amazon’s partnership with insurtech Acko rather than an incumbent also highlights the retailer’s desire to work with digital and agile companies. This will put added pressure on incumbents, not only due to the emergence of a new large entrant in the market, but also the need to digitalize if they want to work with tech companies in any other future insurance ventures.”
The first announcement that suggested amazon would enter the P&C insurance sector was made back in May 2019.