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LONDON – Amazon will begin selling home insurance in the UK through partnerships with three local insurers, further expanding the e-commerce titan’s push into financial services.
The company announced Wednesday that it will open a new service called the Amazon Insurance Store.
The product will show shoppers quotes for policies from insurance providers including Ageas, Co-op and LV+ General Insurance, with Amazon pocketing a commission for each sale from its partners. It is similar to offers on price comparison sites such as Comparethemarket and Moneysupermarket.
Customers who want to apply for home insurance on Amazon can do so by filling out a questionnaire, which asks them questions about their home insurance needs. Then they’re shown a list of quotes from Amazon’s insurance partners, along with reviews and star ratings from other customers. Once a user decides which policy they want to follow, they pay for it using Amazon’s online checkout. The service is initially being rolled out to a few select customers, but will be available across the UK by the end of 2022.
“Finding the right home insurance policy can be a long and confusing task, with budgets often leaving out essential coverage to lead with the lowest price,” said Jonathan Feifs, Managing Director of European Payment Products from Amazon, in a press. opens on Wednesday “When we set out to create the Amazon Insurance Store, we wanted to improve the experience for customers shopping for home insurance so they could easily compare options and make an informed and objective decision, like shopping on Amazon.”
Feifs added that the launch was “just the beginning,” suggesting that Amazon could expand into other insurance categories over time. It is the first time that the company has launched an insurance sales shop. Amazon’s previous insurance products include Product Warranty and Third Party Seller Insurance.
It marks Amazon’s latest foray into the world of finance. The company already offers lines of credit to merchants who sell items on its platform. It also offers buy-now-pay-later loans (allowing buyers to pay for purchases in monthly installments) in the US through a partnership with a real estate technology company. Affirmand in the UK with the banking giant Barclays. Last year, the company launched insurance for small and medium-sized business customers in the UK
Ben Wood, an analyst at research firm CCS Insight, said the move shows how Amazon is “reviving its efforts to further diversify its business as we emerge from the pandemic and pressure grows on its traditional activities “.
The company “has a wealth of consumer data that it can use as it ventures into new areas,” Wood told CNBC, adding, “It’s unclear whether that’s relevant to this foray into ‘home insurance, but the value cannot be underestimated as it expands its business in the future.’
Amazon saw a surge in sales on its site after the 2020 outbreak of Covid-19, which pushed shoppers online as they were prevented from going outside. However, the company’s shares have fallen more than 30% this year as higher interest rates hit tech stocks and investor fears of softening e-commerce sales as the cost of living crisis affects sentiment. Add to that the fact that Amazon is heading into a bleak holiday shopping season, especially in the U.K., where officials have warned of blackouts this winter due to gas disruptions caused by the war between Russia and Ukraine
Earlier this year, Amazon raised the price of its Prime subscription service, which offers faster delivery times and streaming TV and movies, to $139 from $119 in the US, highlighting the challenges they pose supply chain disruptions, labor constraints and high inflation. Prime prices in Europe saw even steeper increases. Higher subscription costs helped boost Amazon’s second-quarter revenue, which rose 7% to $121.2 billion. Amazon is due to release its third-quarter numbers later this month. In July, the company forecast third-quarter revenue growth of 13% to 17%.
Amazon’s move into the insurance market comes amid increasing hype about so-called insurance technology, or insurtech. Many startups have raised significant sums of cash from investors with the proposition that insurance is a market in dire need of digitization. Wefox, a German insurance company, recently raised $400 million in a round that valued the company at $4.5 billion, for example, 50% more than its previous funding round, despite a funding climate of serious fintech.
– CNBC’s Arjun Kharpal contributed to this report