How will Amazon's Insurance Store measure up?

Price comparison websites in the UK have a new competitor in the form of the Amazon Insurance Store. Amazon’s over 300 million customers should expect access to this new capability at the end of 2022. Which means, brokers, insurers, and price comparison websites (PCWs) could all be at risk, from Amazon’s new venture.

How will Amazon stand out from all the other players in the insurance game? 

They already have a leg up on other providers in their already massive customer base. On top of that, they know a lot about their customers’ shopping habits and by extension their lives, which would make it easy for them to use the data they have to target insurance offers. For example, if someone purchases a new expensive gadget, Amazon can upsell contents insurance. Or if they buy a suitcase, upsell travel insurance. Buying pet food? Pet insurance. You get the picture. The opportunities are endless if done right. 

Additionally, making buying insurance part of the regular shopping experience as an “add-on” in your cart can also take a lot of the guesswork and hesitation out of the equation, making buying insurance a single-click action. 

What can existing price comparison websites (PCWs) or distributors do to outshine them? 

If PCWs can convince customers they are getting a tailored, unbiased and trustworthy recommendation, they can outshine Amazon. The flip side of the massive marketplace is that people aren’t sure what results to trust on Amazon. Why are they being shown those choices versus others? Is it a paid placement? People may distrust an insurance offering from Amazon if they’re unclear on why they are being presented with that option. 

We also know that people suffer from choice paralysis when presented with lots of different options, specifically when the choices are often fairly similar. If PCWs are able to narrow that choice and present customers with the options that are genuinely best for them then they can get a leg up. 

So what risks does Amazon pose to existing PCWs and distributors?

As we’ve seen with the energy crisis, PCWs can easily become irrelevant in certain circumstances that are beyond their control. The way to avoid that is to ensure they’re not only offering best-in-class digital experiences but also continuously evaluating their business model and what services customers would value from them. 

As it stands they’re all interchangeable and used often on a single-as-needed basis. They need to find a way to provide a valuable service to customers outside that once-a-year interaction to survive. 

It will be interesting to see how customers react to Amazon’s insurance proposition and whether this new venture will be able to pull business away from mainstream insurers and PCWs. Or if consumer apathy and fear of the unknown will keep these incumbent brands from slipping into irrelevance.

---