Exclusive: Amazon considering UK insurance comparison
site - sources
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[August 16, 2018]
By Carolyn Cohn and Simon Jessop
LONDON (Reuters) - Amazon.com
Inc <AMZN.O> is sounding out some of Europe's top insurance firms to see
if they would contribute products to a UK price comparison website in
what would be a major foray by the U.S. online retail giant into the
region's financial services.
Three industry executives told Reuters they had held talks with Amazon
about the possible launch of a site. One said the talks were part of
several discussions Amazon is having with insurers. A second said there
were no imminent launch plans.
While it was not immediately clear what type of insurance would be sold
on any Amazon site, home and motor policies are popular sellers on
existing UK price comparison sites.
"As Amazon becomes a larger part of the home, whether it's products
delivered to the home, security monitoring, home services like Wi-Fi
installation, you can make the case that insurance is the next logical
step for this company," said Morningstar analyst R.J. Hottovy.
The industry sources declined to be named as the talks are confidential.
Amazon declined to comment.
An Amazon price comparison website for insurance products would be a
potential challenge to existing UK sites given the U.S. company's
cutting-edge technology, reach and loyal customer base.
Two of the most high profile are comparethemarket.com which shows
products from insurers including AXA <AXAF.PA>, Hastings <HSTG.L> and
eSure <ESUR.L>; and GoCompare <GOCO.L>, which lists insurance from firms
such as Santander <SAN.MC> and LV= [LV.UL].
A UK insurance site would also build on Amazon's existing products in
Europe offering extensions to manufacturers' warranties, a service known
as Amazon Protect.
While Amazon's loyal customer base and reach would probably prove
attractive to some insurers happy to cede some of their premiums to
Amazon to expand sales, the potential for premiums to be forced lower
through competition could deter others.
One of the industry sources said the comparison site model fitted
Amazon's strategy of offering a range of products, as opposed to
partnering with one firm.
A price comparison website in particular could also be used to help
drive traffic to its other marketplaces, Hottovy said.
It was not immediately clear what financial arrangements Amazon would
strike with insurers if it were to go ahead.
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The logo of Amazon is seen at the company logistics centre in Boves,
France, August 8, 2018. REUTERS/Pascal Rossignol/File Photo
Tech-rival Google launched a financial services comparison site in the United
Kingdom and the United States in 2016 but shut it down after only a year due to
low traffic.
REGULATORY BURDEN
In the United States, Amazon has a joint venture with insurer Berkshire Hathaway
<BRKa.N> and JP Morgan <JPM.N> aimed at slashing U.S. healthcare costs. It also
offers a small business loan program.
In Europe, Amazon has had a partnership with The Warranty Group since 2016 to
offer the warranty extensions. It also offers co-branded credit cards in the
United Kingdom and Germany although it does not lend money of its own.
In a sign of potential expansion plans, Amazon began to place job ads last year
for staff for a new insurance business in Europe, without giving details.
While Chinese tech giants Alibaba <BABA.N> and Tencent <0700.HK> have large
finance arms, leading Western tech firms have taken a more cautious approach to
heavily regulated financial services, which often have hefty capital
requirements.
A comparison site, however, would let Amazon give its customers access to
insurance from a variety of providers while avoiding that level of regulatory
burden, industry sources said.
The use of comparison websites to buy motor and home insurance is more prevalent
in the United Kingdom than Europe or the United States.
Some insurers rely heavily on comparison websites for sales. UK insurer Hastings
<HSTG.L>, for example, told Reuters it sells 90 percent of its motor policies
through such sites.
Rival car insurer Admiral <ADML.L> also relies on websites for sales and would
be open to joining any Amazon site, its chief financial officer, Geraint Jones,
said.
"If it establishes a comparison site then I suspect Admiral will be interested
in being a member, potentially. Price comparison is the main source of
distribution of our products and we'll await with interest what they do," Jones
told Reuters.
(Additional reporting by Sinead Cruise in London, Noor Zainab Hussain in
Bengaluru, Jeffrey Dastin and Paresh Dave in San Francisco; editing by David
Clarke)
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