There are rumblings on the horizon (well over the Atlantic) that the two biggest names in technology are about to sink their claws into the insurance market in the United States. Amazon is strongly considering entering the life insurance market and Google is about to jump into car insurance according to the news.
Google and Car Insurance
This really can’t come as much of a surprise to anyone. Google has been pioneering driverless car technology and it perhaps has the world’s largest GIS database thanks to all the effort that’s gone into Google Maps. Insurers should be alarmed by this news though.
In the recent PWS survey of CEOs it was clear that 60% of CEOs are alarmed by technology and aren’t certain which path to follow in implementing technology benefits in insurance companies. Google is likely to have no such qualms. Google has a huge portfolio of new technology products under constant development and while the company also prunes that portfolio mercilessly when products fail – it will be pretty confident that it can harness it’s access to nearly unlimited data and established technology in its portfolio to carve out a big chunk of the auto insurance market.
Insurers are going to have to ask some big questions of themselves if and when Google launches this offering. Google is a brand which has a lot of public trust and respect; even following the Edward Snowden revelations.
Amazon and Life Insurance
This is perhaps the more surprising rumour. However, Amazon has carved out a huge chunk of the cloud computing market and it probably has access to more computing power and data storage than nearly any other company out there. That’s going to give the company a real edge if it does decide to enter the insurance market – it’s going to be able to crunch risk assessments and build complex risk models with no perceptible drain on resources.
Amazon also has a good reputation for customer care; something that the insurance industry doesn’t always get right and while current regulatory actions may be over-the-top compared to the situation on the ground – there’s no doubt that customers aren’t delighted with the industry.
It’s also worth considering that if Amazon and Google have seen the potential in the insurance marketplace than there’s a whole host of other technology companies who may feel that they compete there too. Social media providers in particular may be looking at ways to exploit their huge databases of personally created content to create even more accurate risk models in the future.
The insurance industry needs to act now to combat the threats posed by technology companies before it’s too late. Both Amazon and Google could take a substantial bite out of the markets they are said to be entering and they could well use that to expand their product range and service.