Amazon has officially entered the insurance market. Not content with absolutely dominating the ecommerce space, the retail juggernaut has recently launched an insurance price comparison platform in the UK. Initially launched to select test groups in late 2022, the company plans to roll the service out to all customers sometime in 2023.

"We understood that the process to find and purchase a home insurance policy was often time consuming and confusing, so we set out to deliver a simple, convenient and transparent way for UK customers to shop for home insurance,” said General Manager of the Amazon Insurance Store UK, Vassil Gedov. "Right now, we're solely focused on helping customers shop for home insurance via the Amazon Insurance Store in the UK.”

The insurance business is naturally watching keenly to see what kind of impact Amazon is going to have on the industry and, while it is certainly cause for some concern, it also provides us with a unique opportunity to take a look at the way the ecommerce brand does business in the other sectors it is engaged with and whether any of those lessons can be applied here in insurance.

Working Back from the Customer

In the words of Gedov, Amazon always work’s "backwards from the customer, and our insurance store is just another example of that.”

Whenever it designs a new policy or process, Amazon is always doing so from the perspective of the customer and asks whether the change makes the shopping experience better for them. Whether it’s making the return of unwanted or faulty products incredibly smooth and convenient, or offering multiple delivery options to give customers the greatest flexibility, every decision Amazon makes in its ecommerce business starts with the customer and works backwards from there.

Insurance brands could stand to learn from this perspective. All too often there exists a public perception that insurance companies are working against them and making it as difficult and opaque as possible for them to understand how underwriting and claims processing is conducted.

"Insurers should aim to serve not only as one-time claims adjusters or sales contacts but also as trustworthy supporters throughout the entire insurance customer journey,” writes McKinsey. "Doing so can improve customer loyalty and thereby garner new business while enabling insurers to respond to changes in risk more quickly. For insurers, this means that investing in customer experience is an investment in their own growth.”

Data and AI

If you read our previous article in this series, you’ll already be primed on how AI is det to cause significant disruption to the insurance industry. However, if you need even more convincing, just take a look at how Amazon’s data processing capabilities drives real value in its ecommerce business.

Everyone knows that Amazon uses data to gain insights into customer behavior and uses that information to recommend additional products, books, DVDs which match up to an individual’s preferences. However, what many don’t realize is that this recommendation engine is directly responsible for nearly a third (30%) of the company’s total annual revenue. And, while the world of data privacy is set to get a whole lot more complex over the next few years, the need for companies to leverage analytics and AI is only set to grow.

Data will help you better understand your customers and garner increased loyalty through this understanding. Research from McKinsey revealed that 41% of insurance customers have already researched alternatives to their current provider, and around half have switched to a different insurance carrier. Moreover, only 35% of insurance customers are satisfied with their current provider.

By leveraging data in a comparable way to Amazon, insurers can become better at attracting new customers and retaining existing ones. Add to this the fact that data driven recommendations can inspire customers to purchase additional products or be upsold with expansions to existing policies and it’s easy to see how an Amazon-like attitude to data and personalization can benefit insurance brands.

"Demystify products and processes, and embrace complete transparency,” says risk solutions provider, LexisNexis. "A customer who does not find value in the product sold to him or her, won’t remain a customer for long. Use data analytics on a real-time basis to offer the most relevant insurance solutions to a customer’s needs, based on their profile. Customers hate being made to go through a maze of products, most of which are not relevant to them.”

Final Thoughts

Amazon entering the insurance market was bound to cause shockwaves throughout the industry. However, before we all panic, it would behoove us to step back and see what lessons we can take from the retail titan.

Creating an Amazon-like experience in the digital insurance space is sure to be a hot topic at Digital Insurance Connect 2023, being held in August, at the Austin Marriott Downtown.

Download the agenda today for more information and insights.