Because we work with a number of companies that sell software and services to the insurance industry, we hear all kinds of things. Some of them are understandable enough. They’re fair, balanced, and reasonable. Some of the other things we hear? Not so much. They range from misplaced concern to downright panic, from misled anxiety to completely unhinged.
Case in point: The insurance industry is presently preoccupied by red herrings like artificial intelligence, (AI), robotic process automation (RPA), machine learning (ML), and blockchain (BC). Perhaps its preoccupation is related to its conviction that an equation like this must be true:
Insurance – [AI + RPA + ML + BC] = DOA
Who knows? What we do know is that AI, RPA, ML, and BC may be the least of the insurance industries worries because it’s now in near-meltdown over the ostensible entry of tech giants [the industry’s term] into the industry.
Putting the Drama in Dramamine
Here’s one of the things we heard recently:
OH, MY GOD! AMAZON’S GETTING INTO THE INSURANCE BUSINESS!!
At first, we wanted to join in the fun. So, we started running around in circles, frantically screaming things like: “Amazon is coming! Amazon is coming!” Then we stopped, ran circles in the other direction, and started yelling, “Egad! It’s digital disruption!” Then, we huddled en masse, trembling, sweating, and motion-sick, as we all cried in unison, “Oh, no! We’ll be innovated into data-driven, customer-centric Hell! AAAAAYYYYYEEEEEE!!!!!!”
After we calmed down, toweled off, let our stomachs settle, and gave it a second of rational thought, we realized no such thing was happening. Amazon isn’t getting into the insurance business. It’s staying in the distribution business. It’s not going to write, underwrite, or issue policies. It’s not going to accept, adjust, adjudicate, or pay claims. It’s simply going to act as a distribution channel for insurers who want to use the Amazon platform.
Get a Grip
Granted, Amazon excels at things on which the insurance industry could use a little work. As examples, Amazon:
- Knows its customers cold, thanks to its technology
- Cross-sells and up-sells like a boss
- Offers products that entice customers
- Effectively reduces customer-acquisition costs.
But unlike companies like CVS and Walmart that are purchasing or attempting to purchase insurance companies, Amazon will be a distributor, not an insurer. Moreover, it’ll be a distributor for relatively commoditized personal-lines products like life, auto, homeowners, and — perhaps — health insurance for its own employees. It won’t be taking on the headaches of underwriting, claims, and regulatory compliance. Nor will it be distributing complex commercial insurance. (Amazon has invested in digital insurance. But the only prospect, so far, is Vasily Shcherbakov. And he may not need to insure his digits if he follows through on his plans to switch to harmonica.)
So, the first thing everyone in the insurance industry needs to do is calm down. Then it needs to re-focus on its objectives. After that, it can choose to:
- Build technology to mimic the reach and functionality of Amazon’s
- Pay Amazon to use its technology
- Pay Amazon to distribute its products.
But 1 through 3 notwithstanding, you definitely won’t be meeting with your Amazon insurance agent.