Lemonade digitally disrupts incumbent insurers and is not shy to expose carrier's analogue weaknesses. It then complains that Amazon is poaching its staff and that's unfair practice.
The last click is key to any battles for the insurance customer. Amazon does not create the products that it sells. No 20th century vertical integration for them. They own the “last click” to the customer’s wallet and can partner to get any product they want.
Or the last conversation with Alexa.
Why Amazon is equally feared by incumbents and startups
Amazon proves that customer access is more important than product. If you have customer access you can always partner with another company that has the product (such as the company behind the Amazon Protect button).
Amazon Alexa’s voice-driven capabilities bring them even more customers at even lower CAC.
Amazon is a customer-first company. They will be sure to contrast that with the insurance industry’s woeful customer service reputation.
"Amazon nightmare for incumbents:
Having no direct relationship with customers and so being relegated to the role of a commodity risk carrier at the back-end where they need to compete with white label vendors such as the Warranty Group.
Amazon nightmare for Insurtech startups:
Investing a lot of money to acquire customers, which Amazon can do by simply adding another button in the right place.
Or as some would say privately “We are in deep s***”.
Attack is the best form of defence. Adopt a proven digital insurance platform whilst you are in a position of strength and can "KA-POW" Amazon.
Or you could always be the commodity risk carrier of choice for Amazon.
Offering extended warranty is a screamingly obvious strategy. This article in Consumer Affairs describes research by Professor Pranav Jindal at Penn State University that contrasts the typical profit margin on products around 15% to 20% with the “more than 200% profit on the extended warranty”. If you wondered about the persistence of sales people in stores selling extended warranty, now you know why. The extended warranty sold by Amazon Protect is created by one of those huge but little known white label vendors. The Warranty Group, which underwrites Amazon Protect policies, has operations in more than 35 countries and nearly 1,600 employees and about $2 billion in annual revenue.The company was recently acquired by Assurant, a publicly traded (NYSE:AIZ) company for $2.5 billion.