The European insurance market is big, and that's apparently attracting the leading global e-commerce business to launch a U.K. insurance-price-comparison portal. Amazon.com Inc. (AMZN) is talking to a number of leading European insurers about the creation of a price-comparison website in the U.K., according to Reuters. (See also: Amazon Mulls Offering Home Insurance.)
Citing three insurance industry executives in Europe, the report mentions that the Seattle-based company is exploring whether the insurers could contribute products to the website. The discussions are part of broader dialogue. It remains unclear when and if the leading retailer will launch any insurance offerings and what kind of insurance products will be covered in the prospective launch. It is also unclear how Amazon will structure the financials with the partnering insurers.
A look at the current insurance-price-comparison sites of U.K. reveals that home and auto insurance policies are the most popular products. U.K. insurer Hastings sells around 90% of its car insurance policies through comparison sites, and competitor Admiral Insurance’s chief financial officer, Geraint Jones, told Reuters that his firm “would be open to joining any Amazon site.”
Multiple Partners in Marketplace Model
With its cutting-edge technology, Amazon is well positioned to challenge existing U.K. insurance portals. Amazon already has a huge, loyal customer base in U.K. that it can leverage for initiating insurance sales. Instead of partnering with one insurer, a comparison portal makes a better fit for Amazon’s marketplace model through which it can offer a wide range of products.
The potential insurance partners will benefit from a new, established channel that can help them expand sales. Some of the insurers may be willing to lower their premiums to gain more sales through Amazon, though others may take a hit on revenues. The customer is expected to be offered a choice among low-cost competitive offerings.
“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, as quoted by Reuters.
Amazon's Other Joint Ventures
This is not Amazon's first attempt in the European financial service space. It has had an existing collaboration with The Warranty Group since 2016 for offering warranty extensions. It does not offer any loans on its own, but it does offer co-branded credit cards in Germany and the U.K.
The online giant already runs a merchant lending program for small businesses in the U.S. and has a joint venture with insurer Berkshire Hathaway Inc. (BRK.A) and JPMorgan Chase & Co. (JPM) to help reduce health care expenses.
In the past, internet search giant Alphabet Inc.’s Google (GOOGL) also attempted an entry into financial services. It launched a financial services comparison site in the U.S. and the U.K. in 2016 but was forced to take it down within a year due to low traffic.