Amazon has made the decision to shut down its UK Insurance Store a mere 15 months after its launch in October 2022.
The move comes as the US tech giant cites “prioritisation” as the primary reason, emphasising the need to redirect its focus towards other core areas of the business. Despite the closure, Amazon expresses a commitment to extracting valuable “lessons” from its venture into the UK insurance market.
Initially heralded as a major development within the industry, Amazon’s foray into the insurance sector had been a topic of discussion for years prior to its official announcement. However, with just over a year since its inception and the addition of only two more providers, the online retail giant has opted to close down its Insurance Store.
The Amazon Insurance Store, launched to facilitate UK consumers in shopping for home insurance, partnered with three insurers at its inception: Ageas, Co-op, and LV=. Subsequently, two more insurers, Policy Expert and Urban Jungle, joined the initiative. The closure marks the end of Amazon’s brief venture into the insurance market, leaving industry observers and customers alike to ponder the implications of its exit.
A statement by Vassil Gedov, head of the Amazon Insurance Store, was shared with Coverager. It said:
“Over the last year, we have been evaluating various businesses and programs, and as a part of that we’ve made the difficult decision to discontinue the Amazon Insurance Store. Customers who have purchased policies will not see any changes to their coverage, claims in process at this time, or future claims they may make during their policy term. We will provide guidance to customers on any actions they need to take as a result of this change.”
Rory Yates, SVP Corporate Strategy at EIS, commented on the move, saying: “Leveraging your assets always seems like a sensible way to go. In this case their customers. And whilst we will hear from a lot of commentators that they a. find this a predictable outcome and b. it reflects the complex and competitive nature of insurance, I would largely disagree with them.
“I think this was always a massive learning opportunity. And that always bears fruit in my experience. And my hat is off to all those that participated in this. Creating a “minimum standard” and trying to create a “better experience” were noble efforts. And in other industries both more likely to have succeeded. This therefore perhaps reflects more on the industry and where we are with consumers than it does the platform or approach.
“Price leading purchase habits subsequently required aggregators to validate the best price they could, and to try and do this whilst reflecting the “needs” of the customer. To validate this you need scale and market coverage, otherwise it’s hard to justify “cheapest” or “best value” to a consumer. And it’s therefore impossible to compete in this market model without being price (specifically) competitive, and the data on pricing in this article suggests this was the case. And I suspect market coverage played a part as well.
He added: “My advice is that Amazon should now focus on their embedded insurance potential and focus on markets (e.g. Healthcare) where there is sufficient enough value benefit in creating better experiences and convenience, and where they generally have more leavers to compete best. And I suspect they will do exactly that. For insurers, we need to keep experimenting, taking market opportunities and learning fast from them.”