Less than 15 months after its launch, the UK Amazon Insurance Store is now closed for business.
Amazon announced its insurance business in the UK in October 2022, partnering with companies like LV, Co-op, and Ageas. You could buy home, travel, car, and other insurance products with Amazon.
The company has assured customers that their ongoing policies will not be affected and they will continue to enjoy coverage. You’ll be able to make claims as usual, without any delays. Amazon said that it will guide and help customers if any changes are made.
Amazon’s exit goes to highlight the difficulty of entering a highly regulated market even for commercial giants.
Turning the heads and buying habits of the British public is not easy.Ranald Mitchell, Charwin Private Clients director
However, this doesn’t come as a surprise for insurance experts, given how unplanned Amazon’s move was, especially for the UK markets.
Reasons Behind Amazon’s Exit
However, this isn’t the first time a brand has failed to fathom unexplored waters. Tesco, the popular grocery brand, once forayed into mortgage and other financial services, only to close that business later on.
Sainsbury, a supermarket chain, has also had similar experiences in the UK.
Quickbooks had announced that they would offer commercial insurance products in 2020. However, it quickly abandoned the project after failing to achieve profit and return targets.
Stephen Perkins, managing director at Yellow Brick Mortgages, has outlined several reasons for Amazon’s failure.
For starters, there wasn’t much market awareness about Amazon’s insurance business. People didn’t know that Amazon sold insurance in the first place, making business tough for the giant.
Another reason could be the continued losses or shrinking profits, which were too little for the amount of risk involved in the business.
Lastly, the regulatory requirements in the insurance business are far more when compared to online retail business, which could have been too much for Amazon to comply with.
Experts have also acknowledged the fact that it is not good for customers, since they will now have a choice less when picking an insurer.
But at the same time, it is also a big relief to them. There’s always a threat of big corporations using their brand name and network to disrupt industries. However, with this incident, it is quite evident that it’s not that simple.
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