Amazon is in the insurance business. The retail giant is offering Amazon Protect across Europe. The policy covers accidental damage, breakdowns and theft of objects. Coverage is for two to four years from the delivery of the product. All these incidents are thus covered.
This major retailer is considering offering home insurance as well. Rivals in the industry are worried. At the S & P Global Ratings insurance conference, analysts assured competitors that there was no reason to panic. Joshua Shanker, a Deutsche Bank AG analyst stated that initially Amazon would offer a “bare-bones” policy.
Last year insurers in the US and Canada generated $92 billion of premium from homeowners. Another point made was that it is time consuming to set up the legal entities needed to underwrite risk.
Amazon has made moves into other big regulated industries. Pharmacy companies were nervous when Amazon acquired licences in more than a dozen states to sell healthcare products as a wholesaler. The retailer has an edge over competitors in that its vast store of data on consumers could be a tool for pricing insurance.
Furthermore, Jeff Bezos, Warren Buffett and Jamie Dimon want to fix healthcare. A partnership has been developed between Amazon, Berkshire Hathaway and JP Morgan Chase. The latter is the nation’s largest bank. Together they believe that one of the country’s biggest problems is soaring healthcare costs.
The new company is still unnamed. However, a spokesperson said that the new company will be “free from profit-making incentives and constraints”. There are 840,000 global employees between these three companies. Initially they will concentrate on providing health cover for these employees. They will not offer a product to other companies.