Amazon is the platform most likely to cause widespread disruption to Europe’s general insurance market over the next five years, a survey of insurers has found. Insurers rank Amazon as the world’s most potentially disruptive platform,
In an article, “The Actuary'', The magazine of the Institute & Faculty of Actuaries, has said, eight in ten of the 1,000 survey respondents also expect the internet-sales giant to enter the whole of the insurance value chain should it move into the European market.
Chinese multinational Tencent is seen as the second most potentially disruptive platform, followed by Google, Facebook and Ant Financial – the world’s highest valued FinTech company.
Insurance Innovators, which carried out the research, said industry insiders are in no doubt that these firms are preparing to wreak “Uber-style” disruption on insurance.
“The tech titans are seen as in pole position to be first to market with automatic insurance switching services, and are also expected to dominate the market in the long term,” it added.
Despite the potential disruption, the survey respondents highlighted a number of barriers for non-insurance brands looking to enter the market.
A lack of actuarial understanding was cited as a significant hurdle by 42%, while a similar number said regulatory compliance and inadequate historic risk data could be barriers.
Striking partnerships is seen as a way of overcoming these, with 90% of the respondents saying this will also be an important opportunity for insurers’ distribution strategies.However, there is no guarantee that platforms’ partners of choice will be today’s primary insurers, with 90% of the respondents anticipating all risks to be passed onto reinsurers.
The most successful digital platforms are either expected to offer their own insurance, or provide access to only a small number of third-party providers in the next two years.
These firms are predicted to automatically rebroker customers’ policies based on real-time data flows within five years, while aggregation or switching services are likely to be their chosen models in 10 years.
“As digital platforms become ever more dominant in consumers’ lives, the insurance market will be reshaped to suit the algorithms that power the platform economy,” Insurance Innovators, said.