Bought By Many co-founder unimpressed by Amazon insurance plan
Amazon’s rumoured plan to set up an insurance price comparison service is unlikely to cause much impact in the insurance industry and there would be far more disruptive opportunities for Amazon to enter the market, insurtech Bought By Many co-founder Steven Mendel, told Intelligent Insurer.
Amazon.com is sounding out some of Europe’s top insurance firms to see if they would contribute products to a UK price comparison website in what would be a major foray by the US online retail giant into the region’s financial services, according to an Aug. 16 Reuters report.
The online price comparison model is more than 20 years old, and the market is mature, Mendel argues.
“The four main price comparison sites all provide a good experience and tangible savings for their users on mainstream insurance products (particularly car insurance). It is hard to imagine what extra value Amazon - or anyone else - could add to generate more demand,” Mendel says.
By Amazon's standards, the market opportunity in price comparison is already pretty small, Mendel says.
"Amazon Compare" hardly has the feel of the bold moves we have come to expect of the big four tech companies,” he adds.
The insurance industry has been worrying and speculating about the consequences of a potential entry into the insurance sector of technology giants like Apple, Google, Facebook and Amazon for quite some time.
Mendel argues that there would be far more disruptive insurance opportunities for Amazon that a comparison website.
“Amazon is the archetypal ‘long tail’ business,” Mendel says. “Its success with consumers in retail is based on a simple value proposition: Amazon is the place where you can find anything and everything you might possibly want to buy,” he explains.
“Insurance is also a ‘long tail’ market,” Mendel says. “The parallel to obscure retail demand is niche insurance needs, as Bought By Many has learned developing products for groups as diverse as people with cancer, nail technicians, and parrot owners,” Mendel says.
While the mainstream insurance market is highly consolidated, the niche insurance market is fragmented across a large number of specialist brands, he argues.
“What if Amazon created "Amazon Insurance Marketplace", and equipped all those specialist suppliers with a platform to distribute their niche insurance products digitally?” Mendel asks.
To find out more about the disruptive potential Amazon could have in the insurance market, read the full story here.
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