Amazon has announced it will begin to offer insurance to small and medium-sized UK business owners. This will be Amazon’s first foray into the business insurance industry in the UK and unsurprisingly it has insurers worried. Amazon’s entry into the insurance market is to offer an alternative to traditional insurance players, through the broker Superscript. Members of the Amazon Business Prime Programme will have the opportunity to purchase plans including cyber and contents insurance.
To compete, many insurers may need to refresh their screens for a new perspective on their markets. More importantly, acquiring the ability to quickly manufacture a product, combine it with others, and put it into any distribution model should be top of mind. Whether that channel is an agent, aggregator, online or embedded in buyer journeys, it should be customisable for a personalised user experience. Why is this important?
Customer-centric POV: A win-win situation
Traditionally insurers have been product-focused but to compete with Amazon, a customer-centric focus is needed. Companies like Amazon and Netflix already have a customer-centric viewpoint and deploy it exceptionally well. They are able to tweak and change their content to the individual customer to ensure it is relevant.
Insurers with traditional policy administration will find this hard to implement because their systems focus more on pushing the product to customers and less on what products the customers actually need. Customer-centric systems on the other hand innately understand customer needs and ultimately offer a better chance of meeting their needs and securing their business. Real-time data informs the customer experience to make it more efficient and help insurers see protection gaps and opportunities.
Building loyalty and becoming a one-stop-shop
Amazon has one of the largest customer bases, with over 300 million active users. This gives them an automatic edge as they can leverage that relationship and sell any number of products that might require insurance or insurance by itself. To compete, insurers should consider a new approach to customer loyalty and become a one-stop-shop offering a multitude of covers such as home, car and life insurance. Once customers are engaged through multiple lines, it is more likely they will remain satisfied and in turn less likely to swap providers. The churn rate is significantly reduced.
What’s more, consumers more than ever are attuned to insurance propositions that reflect their lifestyle. Insurers that are able to flex and adapt to consumer wants and needs have a greater chance of capturing and keeping a solid customer base.
Without this approach, many insurers will continue to be seen by customers as inaccessible and unrelatable. Action is needed to create a more human and responsive aspect that creates bonds and loyalty that rival the hold Amazon has over its customers.
Bad technology is bad for business
Competing with new market entrants requires new systems that enable companies to launch new products quickly, as well as test new markets. This is vital to compete. Amazon is the master of staying relevant to their customers. For instance, Amazon automatically updates language and currency choices based on where a customer is located. From here, Amazon has a strong starting point to begin offering embedded insurance – the bundling of insurance products at the point of purchase.
Amazon is not the only contender insurers need to be aware of. Full-stack insurtechs are also vying for their share in the market. Even manufacturers are players. Tesla, for example, has started to offer insurance to autonomous vehicles. For Insurers unable or unwilling to update their incumbent technology, there is a high chance that they will be left behind as others progress.
Insurers can keep the playing field level
Fighting fire with fire is good guidance for this scenario. Insurers can mirror the technology DNA of leading consumer-facing tech giants, like Amazon itself. That implies a certain approach to technology, but also methodology and decision making in the organisation. Insurers need to think like tech companies: fast, simple, agile. They can take a “coretech” approach.
From an infrastructure perspective, forward leaning insurers are beginning to understand that the platform-based technology championed by the consumer tech titans should be at the centre of their ecosystem, because carriers cannot operate as hermetically sealed businesses—they must have a way of absorbing external partners and technologies. Their core systems can be that platform. Their role and their architecture have changed but they should no longer be viewed as a backend admin system, rather a manufacturing and customer engagement system.
While Amazon turns to insurance, insurers should turn to technology to ensure they’re competing on a level footing.