Briefing: Amazon exit is further evidence of insurance sector’s resilience

By Yiannis Kotoulas

When e-commerce giant Amazon launched its insurance store proposition back in October 2022, the announcement was accompanied by considerable fanfare. 

At the time, various commentators lauded the move as the fulfilment of a dream – that one of the world’s biggest tech firms would enter the UK insurance industry, disrupt the sector and bring forth a golden age of modernised, digitised customer experiences borne on the rising tide of retail expertise. 

With that in mind, when news broke last week (24 January 2024) that Amazon would close its insurance store after just 15 months of operation, it came as somewhat of a surprise. 

But should we have been expecting it? 

Amazon’s insurance store provided customers with the ability to compare different home and contents insurance providers, based on price and coverage, and then purchase a policy without leaving the site. In a way, it functioned as a sort of price comparison site without the range of providers that the larger price comparison sites boast. 

Perhaps the issue with Amazon’s most recent attempt to disrupt the insurance sector was simply that it was not all that revolutionary. 

Speaking to Insurance Times, Matthew Kearney, vice-president of strategy, customer experience and transformation at NTT Data UK, noted: ”People were both concerned and excited by the idea that the tech giants were going to come in and disrupt the sector – people in the industry wanted to see change and more digitisation and it was almost a rallying cry.

”But [Amazon’s insurance store] was a bit disappointing. Amazon is famed for solving problems, but [it] didn’t solve a problem – there wasn’t really a value proposition other than ‘we are Amazon’.

“It just wasn’t on par with the price comparison sites that are in the UK already, which are pretty slick.”

Dare to disrupt

Amazon will, one predicts, not stay away from the insurance sector forever. But its most recent failed foray does provide further evidence of the market’s resilience. 

Much is said about the the problem of legacy technology and the sector’s perceived sluggishness where innovation is concerned – but the unique character of the insurance sector and the specific expertise that the market contains makes it incredibly difficult for an outsider firm to arrive and shake it up. 

Innovation is, of course, required to keep the industry relevant to customers and allow it to provide a service that they value, but that impetus will most likely come from within the sector. 

This is an opportunity for both the established carriers and their insurtech partners – the insurance-specific expertise that they hold provides them with a somewhat exclusive opportunity to shake up the sector, as well as improve its reputation and relevance to customers. 

Change is eminently possible – it just has to come in a form that customers really want.