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US-based retail giant Amazon is said to be investing circa $15.7 million in Indian insurtech Acko, which provides online-only insurance products.
Under the deal, Amazon's Indian business will reportedly act as Acko's distributor, and co-develop new insurance products with the company. Acko holds its own insurance license, and raised a $30 million round in May. Amazon has yet to confirm the deal.
The retail giant already offers multiple financial products including SMB lending and Amazon Protect, an accident coverage program, so gaining access to Acko's product suite would further boost its standing as a financial services provider.
This should concern legacy insurers for two reasons:
- Amazon's troves of data on Indian customers would allow it to personalize its insurance offerings. Combined with its seamless digital purchasing journey this could make its offerings the most attractive option when compared with incumbents, which usually take a less customer-centric approach to constructing and selling policies.
- The Indian market gives Amazon's insurance business a huge expansion opportunity. According to the Times of India, currently only 3% of insurance is bought online across India, in a circa $80 billion market. However, the paper adds, this percentage is expected to skyrocket as India's young and tech-savvy population attains financial maturity, a pattern we've already seen in China.
Amazon's Indian venture is probably a springboard for a move towards more established markets. India is some way away from Amazon’s key US and European markets, suggesting that it's using India as a test lab for expanding its insurance operations. However, Amazon's decision to flex its insurance muscles in India is probably also down to the fact that Amazon has stronger competition in this market in the form of home-grown rival Flipkart — which has also begun stepping into insurance.
In Europe and the US, meanwhile, Amazon has fewer real competitors. As such, it’s likely that if Amazon’s venture with Acko succeeds, we’ll see it striking similar partnerships closer to its core markets to bulk out its insurance presence there. If this were to happen, legacy insurers and smaller insurtechs would be up against some stiff competition.
BI Intelligence, Business Insider's premium research service, has written a detailed report on the future of life insurance that:
- Looks at the world's biggest and most innovative life insurance markets, and trends they're setting for the space.
- Explains the major inefficiencies embedded in the life insurance status quo, and the problems they're causing providers and consumers.
- Outlines the two main strategies life insurtechs are adopting to drive change in this market, for the benefit of buyers and sellers of life insurance.
- Discusses the best practices life insurance incumbents and startups should adopt to steer clear of the risks still attached to applying emerging technologies to such a tightly regulated product.
- Gives an overview of what the rise of life insurtechs has in store for the life insurance space going forward.
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