Struggling motor insurers could soon have to contend with an additional threat from Amazon as the tech giant prepares to enter the Indian market, GlobalData has warned.
The firm explained how Amazon's partnership with Bangalore-based insurtech Acko may be a sign of huge change for the industry, potentially shifting consumer expectations around buying insurance products from non-traditional players.
“The tech giant is launching it in India, but has an enormous global reach, which could eventually make it a strong competitor for incumbents around the world,” said Ben Carey-Evans, insurance analyst at GlobalData.
“Motor insurance has been one of very few product lines relatively unaffected by COVID-19 so far, with claims largely declining, due to people travelling less.
“However, insurers will not welcome the extra competition as vehicle sales are expected to decline in the wake of the pandemic as consumers continue to work from home.”
Acko revealed on Tuesday that it had raised $60m (£46m) in its Series D financing round led by Munich Re Ventures, with Amazon, RPS Ventures and Intact Ventures also participating.
GlobalData added that large global tech companies such as Google and Amazon have enormous customer bases that they can leverage when selling insurance.
However, it found last year that 62% of UK consumers would prefer not to purchase an insurance product from Amazon. Likewise, 63%, 66%, and 78% of consumers would not purchase insurance from Google, Apple and Facebook, respectively.
“Since customers are reluctant to purchase insurance from tech companies, partnering with a third-party provider is the better strategy, at least until they become recognised names in insurance,” said Yasha Kuruvilla, insurance analyst at GlobalData.
“Amazon’s partnership with insurtech Acko rather than an incumbent also highlights the retailer’s desire to work with digital and agile companies.
“This will put added pressure on incumbents, not only due to the emergence of a new large entrant in the market, but also the need to digitalise if they want to work with tech companies in any other future insurance ventures.”
Author: Chris Seekings
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