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Amazon broadens insurance business by focusing on startups

The e-commerce giant is completing its investment in the startup Acko in India, a huge market where the insurance business is growing, supported by public initiatives. Amazon proves to be the new, powerful competitor for traditional Carriers

23 Jan 2018

We recently described how the online retail giant is no longer just (for insurance companies) a benchmark for the customer experience, but also a fearsome new competitor. 

Amazon Protect was launched last year by Amazon.co.uk, a policy against accidental damage, breakdowns, theft of objects (from washing machine to mobile phone) purchased through the same e-commerce platform, developed in partnership with The Warranty Group, featuring a total integration in the process of purchasing products on the platform to be absolutely seamless and “painless” for the customer, the best in terms of customer experience. 

This first successful trial has been followed by the announcement in London of recruitment campaigns in search of professionals from the insurance world aimed at strengthening the team that will expand this same service beyond the United Kingdom, ie in Germany, France, Italy and Spain, countries where it was already running, but only for specific kinds of goods. 

A further step in Amazon’s desire to expand its insurance business is the acquisition (formally not yet completed, yet foretold by several media press) of the Indian insurtech startup Acko, established in Mumbai in 2017, which has made its first seed investment of 30 million dollars from venture capital. 

Acko has obtained the business authorization, therefore it is not a retailer but a real insurance company, digital-first, focusing on the offer of low-cost but highly personalized policies. 

A startup having a very high potential, facing a much more than promising domestic market, supported by several Government initiatives and expected to increase at least fourfold in the next 10 years reaching a value of about 240 billion dollars. 

Even Amazon’s main competitor in the Indian market, Flipkart, seems to have been negotiating, then crashing, to become part of Acko’s share capital. 

The deal between Amazon and Acko seems to be partly an investment in a forthcoming capital increase, partly a business agreement whereby the ecommerce company will distribute Acko’s policies on its platform. 

Therefore, until now, Amazon’s moves towards the insurance world do not diverge from its “retail” soul: Amazon is what it is, selling basically third-party products and the same could be done with policies, ensuring profit margins (to the detriment of the earnings of the Companies) without having to bear all the heavy burden of commitments, capital, responsibilities, fulfillments incumbent on the companies “producing” insurance. 

Whatever the matter, there is no doubt that the insurance industry cake will also be enjoyed by Amazon in the future. 

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