Weekly Wrapup: Amazon coming to insurance?

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The Weekly Wrapup is analysis of the week's insurance tech news from the editors of Digital Insurance.

This week, Acko, an insurtech company operating in India, announced that Amazon had invested $12 million in the company. Acko's goal is to be "the first internet-only carrier" in the country, CEO Varun Dua told TechCrunch last year. Dua previously founded the insurance comparison site CoverFox.

But Acko's goals go beyond broking, since the company is explicity writing risk. Further, Amazon has been deeply involved with the company this year: In January, it invested more than $15 million in the company and signed on to distribute—and "co-produce"—its products.

That begs the question: Is Amazon looking to make a big move into the insurance sector?

"Amazon’s recent investments in the sector are interesting toes in the water, but whether they will be successful distributing insurance in the long run depends on how they view their role," says Karlyn Carnahan, head of P&C in the Americas for Celent. Her colleague, Celent senior analyst Mike Fitzgerald, notes that Amazon to date has only signed on as a broker, and "this move alone is a pretty big leap to Amazon assuming liability on their balance sheet."

The major comparison point to Amazon's move is Google's short-lived (at least in the U.S.) Google Compare aggregation site for auto insurance. At the time of that launch, there was a latent fear in the industry that Google was coming to take over the business. But that ended up with Google abandoning the idea just a short year later. Forrester analyst Ellen Carney says that Amazon has several benefits Google didn't have.

"Google didn't understand just how much of a relationship business insurance is, especially in the U.S.," she explains. "It peeved a lot of insurers that were buying AdWords from Google that the company was now competing against them."

Insurance carriers, though, aren't buying products from Amazon on the whole, she adds—and in fact, many individual employees likely buy from the company and understand it's prowess in customer experience. If the company sticks to broking, it could easily find willing helpers.

"Amazon gets the value having good relationships between businesses that sell through Amazon, so I think that that bodes well for good relations with carrier partners, should Amazon expand its insurance distribution footprint into the U.S. and Europe," she says.

Regardless of how deep Amazon goes from here, the Acko experiment will be invaluable in understanding just how much Amazon's data and online experience prowess can go in the industry.

"Amazon has the opportunity to truly disrupt by providing a potent recommendation engine that could use their powerful analytical abilities to provide advice and drive conversions,'" Carnahan says. "The ‘people like you typically choose…' recommendation engine, which is already being used very successfully throughout their platform, could be tailored to provide guidance on limits, terms and coverages."

That also includes discovering which insurance products are a good fit for Amazon's digital platform as a whole, Carney continues.

"Amazon is smart in terms of what they're going to distribute and how—they've opted for lower-friction products that they can sell without having to involve expensive humans. That may suggest that Amazon could pass on more complex lines like traditional private passenger auto or homeowners, at least for the time being," she says.

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