After all the waiting it has arrived. Home and Contents Insurance for Amazon customers in partnership with three UK carriers: -
- Co-op ( MarkerStudy Broking)
And early next year we'll see more carriers joining the "panel".
There is excellent analysis on Amazon's new venture by James Yerkess at Amazon Insurance Store launches in the UK. Big changes ahead for the insurance market. It includes quotes from key players at Amazon, Co-op and Ageas- Jonathan Feifs, Charles Offord, and Ant Middle .
Here I focus on claims and what it means for carriers, brokers, MGAs and full-stack insurtechs. The ripple will spread wide and rock everyone even though the focus today is on selling policicies via the portal. Amazon is nothing if not a data freak and logistics expert and I firmly believe Amazon will measure claims performamce KPIs down to a very granular level. The carriers that join the panel will have to constantly improve, the ones that aspire to join likewise and other insurers must achieve or beat the high CX , UX and KPIs that evolve.
A frequent comment on the need for insurers to offer "Amazonesque" standards of customer experience was to state that insurance is far more complicated. Today, Amazon and its carrier partners aim to offer the Amazonesque experience over buying, renewing, adjusting home and contents policies and all aspects of services including claims. The carriers can handle complexity
Recently, Accenture published a timely paper "Transforming Claims and Underwriting with AI" It links customer satisfaction with speed of settlement - obviously not sacrificing effectiveness and efficiency. For accidental damage, TV, phone and gadget claims it is not hard to picture the Amazonesque claim.
Take a damaged TV or phone-
Customer registers eNOL via the claims platform from phone in the familiar way they enjoy with Amazon, WhatsApp etc. Or use any device of choice , prompted for brief description of incident, photos of damage and serial numbers, maybe video for context. The claims platform automatically validates coverage with the policy admin system/core system, , analyses metadata, flags potential fraud or for bonafide claim and in real-time sends data to a contents claim management system which finds current replacement product and price.
Customer is then offered, after deductibles of course, cash or an Amazon virtual voucher via instant payments solution and on acceptance, via her phone, finds the voucher on her phone or cash credited to her account. All in a matter of minutes. Automation and straight-though-processing (STP) is viable today for high volume, lower value claims and speeds up more complex claims by enhacing claims handlers processes and decisioning.
Carriers, brokers, MGAs, insurtechs can deliver this outcome today with partners like RightIndem, SLVRCLD, Imburse. There are many partners to choose from analysed in the article Creating value, finding focus and choosing the right technology partners . This reviews core systems, claims platforms, point solutions, data management- the jigsaw of solutions required to meet the Amazon challenge to come.
More complex claims require the intuition and experience of experienced claims handlers and colleagues of course. And the same claims platform can keep the delightful customer expetrience and build the question set in a bot-framework to feed the property repair claims ecosytem platforms like CoreLogic providing the best of all worlds illustrated below. And believe me, the best of all worlds will be the standard required.
It will be interesting how Amazon manages customer expectations with these complex, potentially long-tail claims that are dependent on many sequential work flows where data is handed off between different parties and systems. This is where a small deletion or corruption of information and data can make a big difference. Patrick Kelahan frequently highlights this; Say there are 5 hand-offs with just a 2.5% error rate - the cumulative degradation of data is - wait for it- 12%. 5% error and the compound errors double to 25%.
When you consider all the communications, much of it verbal and unrecorded, alongside the current challenges materials and component shortages and delivery delays, the volatile pricing and inflations impacts, the shortage of labour and supply chain partners.... there will be more hand-offs and higher error rates.
That is why incumbent insurers are vital to the scheme. They deal with the fact technology is only one part of the challenge. People and leadership, vision, strategy, resource planning, culture, product roadmaps, the challenges of claims inflation, supply chain constraints, skilled people leaving the industry.
Amazon's reputation will depend on how well it is able, via the claims handling competence of its insurance partners, to keep customers informed and onside. Easier for those STP fuelled simpler claims but a different kettle of fish for EOW, subsidence, storm damage and fire & flood claims .
Being in the top quintle of insurers needs professional advice and the SIs and Consultants like EY, Hitachi Vantara, Ninety Consulting, Cognizant etc will help insurers avoid being introspective.
Deploying new technology is not easy as some vendors flipantly say. Even the newer micro-services, API rich, cloud-native platforms like EIS, ICE, Genasys, Instanda require hard work, implelentation and deployment will have its ups and downs and requires true collaborative partnerships. Easier said than done but achievable.
Whilst I have focussed on claims here the Amazon challenge is across the whole insurance space. So it is interesting to look at digital maturity and luckily for UK insurers they can compare themsleves with competitors. Altus publishes the DigitalBar and frequently updates its analysis.
In home insurance the top insurer for digital maturity is Locket with a score of
Ranked #2 is incumbent carrier with a score of 66%. How about the three carriers in the initial Amazon launch.
Top rated at 16 are LV= and RIAS (Ageas Retail).
Co-op insurance is at #22 though in terms of digital claims maturity is higher
Carriers, SIs and Insuretchs can license the complete data from Altus - it is the DigitalBar
The data is collected in the same manner so as far as inter-firm comparisons is a good measure of digital maturity to help planning and strategy
Let's go back to the beginning.
I visialised the Amazon Home Insurance Shop as throwing ripples across the insurance world and all insurers should abticipate what this means to them. At the very least they must have products and services that rank alongside those that Amazon offers. Arguably better as Amazon has the strength of its customer base, what it already knows about them, and the extra data is will now gain by selling insurance. Home and Ciontents in the UK today and you may expect across the rest of Europe, North America, and elsewhere tomorrow.
Motor, travel, pet, rental? It will surely come.
Best make sure those ripples do not turn into tsunamis for lack of planning and preperation.
Declaration: I work for RightInderm and the Altus DigitalBar. You can find out more aboiut leveraging the benefits by emailing me at email@example.com
Feifs said it would only select providers that meet the “Amazon Standard of Cover”, which includes timeframes for claims handling as well as coverage for the most common claims, and that price was “not part of the discussion”.