Online retail giant said to be in talks with British insurers over possible new site

This article is more than 2 years old

This article is more than 2 years old

Amazon 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 US online retail giant into Britain’s financial services.

Three industry executives said they had talked with Amazon about the possible launch. One said talks were part of several discussions Amazon was having with insurers. A second said there were no imminent launch plans.

While it was not clear what type of insurance would be sold, home and motor policies are popular sellers on 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 wifi installation, you can make the case that insurance is the next logical step for this company,” said Morningstar analyst RJ Hottovy.

The industry sources declined to be named as the talks are confidential. Amazon declined to comment.

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An Amazon price comparison website for insurance products could challenge existing UK sites given the 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, Hastings and esure; and GoCompare, which lists insurance from firms such as Santander and LV.

A UK insurance site would also build on Amazon’s existing products in Europe offering extensions to manufacturer warranties, a service known as Amazon Protect.

While Amazon’s 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 down 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.

Google launched a financial services comparison site in the UK and the US in 2016 but shut it down after only a year due to low traffic.

In the US, Amazon has a joint venture with the insurer Berkshire Hathaway and JP Morgan aimed at cutting healthcare costs. It also offers a small business loan programme.

In Europe, it has had a partnership with the Warranty Group since 2016 to offer warranty extensions. It also offers joint credit cards in the UK and Germany although it does not lend its own money.

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 and Tencent 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 UK than the rest of Europe or the US.

Some insurers rely heavily on comparison websites for sales. UK insurer Hastings, for example, said it sells 90% of its motor policies through such sites.

Admiral 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 said.