Insurers need to step up if they want to stay ahead of global IT giants in the race for general insurance customers.

Analytics firm GlobalData says traditional carriers have a head start, but questions how long buyers will prefer established markets.

Commenting on Amazon’s recent launch of motor insurance policies in India, Ben Carey-Evans, insurance analyst at GlobalData, said: “The tech giant is launching in India, but has an enormous global reach, which could eventually make it a strong competitor for incumbents around the world.”

He added: “Insurers will not welcome the extra competition as vehicle sales are expected to decline in the wake of the pandemic, as consumers continue to work from home.”

GlobalData research shows that consumers prefer traditional channels. In recent research it found that 62% of consumers would prefer not to purchase an insurance product from Amazon. Likewise, 63%, 66%, and 78% of consumers would not purchase insurance from Google, Apple and Facebook, respectively.

But this will not protect insurers in the long run.

Yasha Kuruvilla, another insurance analyst at GlobalData, explained: “Since customers are reluctant to purchase insurance from tech companies, partnering with a third-party provider is the better strategy, at least until they become recognized names in insurance.

“Amazon’s partnership with insurtech Acko rather than an incumbent also highlights the retailer’s desire to work with digital and agile companies. This will put added pressure on incumbents, not only due to the emergence of a new large entrant in the market, but also the need to digitalize if they want to work with tech companies in any other future insurance ventures.”

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