Online retail and e-commerce giant Amazon is reportedly on the verge of making its first investment in an insurtech start-up, with the company said close to finalising an investment in online-only insurance start-up Acko.
Acko wants to disrupt India’s insurance industry through a digital-only platform, having raised $30 million and recently received in-principal approval from the financial market regulators in India.
Amazon and Indian rival Flipkart had both been pursuing investing in Acko, it has been reported widely, but at this stage it is now thought that Amazon is close to signing a term-sheet for the investment and a partnership deal with Acko.
It’s said that the arrangement will see Amazon acting as an online distributor for Acko’s insurance products, selling a range of financial products.
The potential for Amazon to enter the insurance space has been much-discussed in recent months, including in our article from November, Incumbents could be relegated, if tech giants come for re/insurance.
Now it appears Amazon is close to taking a sensible step of investing in and partnering with an insurtech start-up, in order to gain the ability to add insurance products to its retail offering, seeing the firm stepping into the sale of financial products for the first time.
Targeting India first is also a smart move, as the burgeoning financial services market there has a strong focus on technology and take-up rates of insurance products are rising all the time.
If Amazon can crack selling insurance online to the Indian market, it will stand it in good stead to break into more established markets such as the United States and Europe.
Of course, if Amazon does move into insurance meaningfully it will likely only be a matter of time before other tech giants such as Google follow suit with their own integrated e-commerce offerings.
It’s also been reported that Flipkart is readying its own entry into insurance sales online, with the establishment of a new entity to focus on financial services and venture investing.