What Could Amazon's Move Into Insurance Mean For Consumers?

Earlier this month I attended The Future of General Insurance (FOGI) conference. Over the two days, a number of key themes emerged including AI, big data, predictive analytics, solving customer pain points and how insurers need to start thinking more like their customers.

So the reports that Amazon is set to move into our industry got me thinking about how they’re ahead of the game, and how this might translate into a better customer experience. Here’s four examples.

Consumer Focused — Amazon prides itself on it’s customer service, starting with CEO Jeff Bezos. The arrival of a blue chip, customer-centric brand could eventually help shift how consumers perceive the industry — starting with their enduring level of distrust.

On day one of the conference, the CEO roundtable discussion (including RSA, Ageas and LV=) highlighted how the industry needs to start worrying about the same things our customers do. One asked: ‘What would it take for consumers to love insurance?’ Could Amazon Insurance be what it takes for consumers to feel the love?

Engagement — In turn, consumers who love their brands interact with them, which could mean moving beyond the typical purchase, renewal and claims touchpoints that currently defines the insurer-customer relationship. This means more data, more knowledge about the customer need, and more opportunities to deliver against it without having to second guess what the consumer is thinking.

At FOGI, Bought By Many served up a great example of how they focused Facebook as a key channel for their customers because 80% of their customers authenticated through the social media site. Knowing this, they now use it to acquire new customers, to define new segments for whom they can build products, for their customer service, and ultimately to better understand their customers, so they can cross sell relevant products at little to no extra cost.

"Could Amazon Insurance be what it takes for consumers to feel the love?"

Ease of Purchase — At the end of day one we heard from Futurologist David A Smith, who explained that our customers are customers of other sectors as well as insurance, and they’re comparing our sites to their personal best. Financial services brands have long admired the relatively seamless Amazon ecommerce experience, and consumers often compare our clunky, question-heavy quote process to that of the online retailer. Having redesigned a home quote and buy process many times in my career, I am excited to see how a brand from outside the industry would tackle the user experience and customer journey. Amazon also is ideally positioned to offer insurance at the point of sale of a relevant product, such as a television, which is intuitive to the consumer and part of a broader trend we’re seeing with some insurtech startups moving into this ‘embedded’ space.

Personalisation = Better service — On the marketing stage on day two, the MD of Buzzvault explained how they have used technology to identify and understand customer pain points, then developed solutions to make them disappear. Their proposition starts with the compilation of a digital inventory that helps consumers check they’re not underinsured. That same inventory is then used to provide a tailored home insurance quote, giving the consumer reassurance they have got the cover that’s right for them. We also heard from Italian insurer, Generali on how using demographic, behavioural and contextual insights had helped them to deliver enhanced personalisation in their email and social media marketing, resulting in higher engagement rates.

"Having redesigned a home quote and buy process many times in my career, I am excited to see how a brand from outside the industry would tackle the user experience and customer journey."

Of course Amazon is a pioneer in this space. Think ‘People like you also bought’, which is based on sophisticated customer segmentation which monitors behavioural patterns and purchasing habits. They could apply similar techniques that would benefit groups of consumers — whether it’s the ease with which they can find a policy that meets their needs, or somehow linking up the insurance experience to their other purchasing and lifestyle requirements. It could mean a more frictionless consumer experience beyond purchasing alone, built on data and harnessing the enabling effects of technology — something we’re already seeing with its Alexa assistant, which allows consumers to ask insurance and risk related questions which helps inform their buying decisions.

Cautionary Tale
But a word of caution, however. If Amazon — as Guidewire’s CEO suggested last week, and Munich Re’s Andrew Rear told the Insurance Times in July — were to get involved in claims, it could prove a double-edged sword. Consumer expectations would, on the one hand, be raised only to be dashed by traditional issues with claims settlement after Amazon passes the consumer to their claims handler. If Amazon is to play distributor alone, then we are still talking more potential touchpoints, and not the kind the consumer would necessarily want — something we’ve talked about here.

Whether it’s a simple distribution play starting with gadget cover, or a more ambitious plan to build a complete insurer, the Amazon question helps highlights some of the enduring challenges the industry faces. It is less a question about whether they can get involved (or even if they will), but how the incumbents respond to meet the needs of the customers of tomorrow as well as today.

What do you think about Amazon’s potential move into insurance? Let us know in the comments.