Is Big Tech a Threat to the Insurance Industry?

Amazon and Google's strategies and intentions in the insurance industry

Sho Tsuchiya
April 5, 2022
Financial Services

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“Would you buy insurance from Amazon, Google, or Facebook?”

- a question Breez posed in a 1500 wide consumer survey. Amazon scored the highest with 55% of respondents saying they would buy a hypothetical insurance product from the ecommerce giant over Google or Facebook (coming in at 46% and 38% respectively). Why should it matter to insurance incumbents? Imagine the access to data, the information big technology companies will be privy to, and ease of distribution via existing platforms…

There’s been attention on Amazon and Google’s entrance into the insurance space that may have unsettled incumbent insurers. Are the giants’ strategies and intentions the same, and what can we learn? Let’s take a quick look.

How do Amazon and Google’s interests in insurance compare?

While Amazon’s focus predictably pivots B2B insurance via creating a vetted network of providers, Google’s movements extend to personal-line insurance needs by investing in neo insurance players, but both lean toward insurtech savvy services.

A closer look into Amazon and insurance

Ecommerce growth is in tandem with the need for insurance, and with it, increases the need for more affordable, accessible, and accelerated insurance solutions. Couple this customer problem with insurtech developments and AI solutions, which eases workflows, and you’ve given new shoes to an old player in this insurance game. Makes perfect sense for Amazon to enter insurance.

In 2020, over 200,000 new third-party sellers joined Amazon’s US store reporting a 45% year-on-year increase. Sellers on Amazon need to have product liability insurance, but Amazon changed its policy in 2021 by going beyond  A-Z Guarantee—it launched Amazon Insurance Accelerator, which offers a vetted network of insurance providers for sellers. (Amazon also assured consumers it will pay claims of under $1000 directly if a purchase damages personal property or causes personal injury.)

Participating in this network is NEXT, tailored to the self-employed, is an insurance service that utilizes AI and machine learning. Additionally, Amazon partnered with Marsh, an insurance broker and risk advisor, to offer digital insurance to small business owners selling on Amazon, more notably selling insurance in India and the UK.

Amazon seems to be trying to accelerate and support insurance coverage for third-party sellers that use its service, but these partnerships also signal the disruption of the commercial insurance broker channel. At the moment, Amazon’s teetering in the insurance space via participation in its network, but where is it headed?

A closer look into Google and insurance

Google’s been eyeing the insurance space since 2012 when it acquired BeatThatQuote, a car insurance comparison site, and its entry into insurance has been somewhat different from Amazon.

In 2020, Google’s parent company, Alphabet, launched Coefficient Insurance in partnership with SwissRe,  via Alphabet’s health insurance company, Verily.

Google has also made investments in Ethos and  Flyreel, to name a few, which provide underwriting and claim, instead of the traditional human touch approach by Insurer. Both a bold and cautionary approach, it took over 8 startup investments in Neo Insurance industry.

(data from various sources presented on SPEEDA Edge)

In 2021, Alphabet’s venture arm, Gradient Ventures participated in a Series D funding round of USD 200 Million in Ethos, a company that offers personalized term life insurance and relies on questions asked during the onboarding process, and uses data science and machine learning to analyze over 300,000 data points to underwrite policies. 

Before this, Flyreel raised seed funding of USD 3.9 million in April 2019, led by GV. Flyreel uses AI to process the data collected from such inspections and automate underwriting decisions. Policyholders can also use the platform to file claims while insurers can take advantage of Flyreel’s ability to identify risks related to any insured property proactively. 

While Amazon provides value to small insurers (as well as its sellers) by being a marketplace through direct partnership, Google seems to be interested in the big insurer’s customer relationship process by investing in disruptors. There’s no hiding Google’s interest because it made it clear that it “likes the (insurance)market” and will be looking at future investments. The nature of these investments, where Google will find its foothold, or perhaps, tentacled reach, is worth watching closely.

Key takeaways

  • Traditional methods exhaust labor and are digitally infant, so insurers need to adapt and emphasize insurtech to prepare for the next wave of competition. 
  • Disruption can mean that someone is solving your customer’s problem better, be it time-saving or less spending. 
  • We look to big names to follow the wind in the insurance space, and it's worthwhile understanding new needs, nuanced solutions, and the tech to use to achieve them.

To learn more about the neo insurance industry, new methods, and the tech it leverages, book a demo to chat with our team.