Earlier this week, it was announced that Amazon is beginning to offer insurance to small and medium-sized businesses in the UK. Partnering with insurtech broker Superscript, Amazon is looking to culminate a perfect partnership between e-commerce and bespoke technology, productising insurance in an entirely new manner in the UK.
“The (insurance) industry needs to bridge the divide between insurers and customers by providing a quick, smooth buying process that is customer-centric,” Cameron Shearer, co-founder and CEO of Superscript, said in a statement.
Members of Amazon’s Business Prime programme will be able to buy cover from Superscript such as contents insurance, cyber insurance and professional indemnity insurance, which a Superscript spokesperson said would be underwritten by “major UK insurers”. They will be offered a discount of 20% to current rates as a way of enticing businesses over to them. (Source: Reuters)
The benefits of corporate giants partnering with small businesses
Industry sources have expressed that partnerships between the tech companies and the industry experts are becoming more likely. This is rather than individual companies being created and becoming the threat. This seems logical; a company with huge capital partnering with a business with niche expertise. With this particular move being Amazon’s first into the UK insurance market; many insurtech, finance and insurance companies will be wondering: what does this mean for their sectors?
Sectors such as finance and insurance are highly regulated and therefore notoriously difficult to break into. The expertise that the smaller companies can provide, such as regulatory requirements, customer-centric ideas and innovation, partners well with the giant databases, market reach, budgets and infrastructure of big organisations.
The agile way in which many small businesses operate can be a benefit for larger, more corporate organisations. Products can get pushed to market faster, and data can be reacted to quicker.
What the concerns are for insurers
With the competition in the UK market forever evolving towards digital methods, insurers must think about their digital strategies. In order to do this, some insurers are considering greenfield, whereas others are exploring the fundamentals of their existing architecture, and where the opportunities lay within. Without some form of innovation, even the biggest insurers are sure to be left behind, as more customers are encouraged and empowered by a productised insurance experience. Being proactive with the masses of data they have available for telematics technology, customer behaviours can be evaluated, and a customer-centric idealogy can begin to take form.
The UK has the fourth largest insurance industry worldwide and the biggest in Europe, as well as boasting the highest penetration rate of any European country. So far, there have been more than 1,500 insurtech companies funded worldwide in the past 13 years. This culmination of both innovative and mountainous businesses make the market exceptionally lucrative for e-commerce, financial and tech giants looking to invest.
Factors that play into these decisions are more varied methods of purchasing, quicker purchases, improved interaction with the insurer and more. If customers have a transparent relationship with a business, they’re more likely to remain loyal, recommend that business to their friends and family, and overall, spend more money. If insurers fail to understand and act on this need from customers, they’ll lose out to those that do.
So what’s next?
It may well be commonplace for such businesses across all sectors to secure partnerships. Knowledge plus funding equals a solid offering to a variety of markets. We’re already seeing a change in the fintech markets, and insurance is sure to follow suit at a growing speed. For now, it’s watching this space, as the competition is bound to be interesting.