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Amazon shuts down insurance business

Journalist: Tom Dunstan, FTAdviser

ended 24. January 2024

Amazon has announced that it is closing down its insurance business less than two years after its launch.

The Amazon Insurance Store offered a range of home and contents policies sold through insurers such as LV and Co-op. 

It said it would look to expand into more products with more partners added over time.

In a statement, Amazon Insurance Store head, Vassil Gedov, commented: “Over the last year, we have been evaluating various businesses and programmes, and as a part of that we’ve made the difficult decision to discontinue the Amazon Insurance Store.

“Customers who have purchased policies will not see any changes to their coverage, claims in process at this time, or future claims they may make during their policy term. We will provide guidance to customers on any actions they need to take as a result of this change.”

What is your reaction to this? Is this a good decision? What could this mean for the UK insurance market?

8 responses from the Newspage community

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Scott Gallacher
Director at Rowley Turton
Amazon's exit from the insurance market shows how difficult it is to break into new markets, even for huge names like Amazon. Whilst their brand is a winner in online shopping, the Amazon name carried little weight in the insurance market, as its exit clearly shows. Of course, any reduction in choice and competition, such as Amazon's exit, is generally bad news for consumers.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Insurances and financial services are difficult sectors for people to dabble in for firms with no experience in them. We saw Tesco and Sainsburys offer mortgages and other services, and scale back and close these down. I imagine that for Amazon the margins of profit compared to the risks were not stacking up. Many people were not even aware it was a service they offered, so probably a lack of take up will also be a factor. Financial Services markets are better served by specialist firms who operate exclusively in the sector.
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Simon Bridgland
Director at Charwin Private Clients
Tiny profit margins or maybe even losses when compared to their usual trade, or perhaps they didnt like the regulatory world of financial services in the UK. Either way, its not a bad thing really, when gigantic companies who thrive on minimising their tax bills leave the UK, perhaps the nation would be better off without them. Some advisers would argue that its one less shop front for a consumer to buy from making it more difficult for them, but in reality how many consumers were really aware of their presence in the market in the first place.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Amazon lasted about the same length of time as the Google Comparison project in 2012, trying to break into a market that is dominated by established brands, so it's not surprising to see them pull out from the insurance space. Clearly it wasn't as successful as planned, and as Amazon has found out, turning the heads and buying habits of the British public is not easy.
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Dave Corbett
Head Of Protection at Protection 1st
I can only assume my wife had quite a large part to play in this, in terms of resource. Hold on someone's at the door.....
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Gary Bush
Financial Adviser at MortgageShop.com
So another large corporate company has run for the hills when the going got a little tough in rolling out a scalable UK financial services company - no surprise there. Having seen Tesco, M & S, Google, Post Office, Sainsbury, and now Amazon all wrap up their operations and hand them over to partner financial companies demonstrates how easy it sounds to run a profitable insurance and finance company and how impossible it can be despite having a huge database of existing customers to push these offerings to. Why large Plc's keep thinking that they can cross-sell tricky and complicated financial products to their customers with very little advice being provided or simply weakly guiding households towards a shopping cart-based purchase of some of the largest and most important transactions of their lives is head wobbling to be honest. Financial advisers across the UK should stand proud today that they continue to survive amongst all the pressures upon them where the corporates fail.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
What seems like a great idea falls down a bit when you realise you have to actually talk to human beings to understand what they need. Anyone who's ever advised on any financial product will tell you that customers rarely know what they want or need, tend to give incorrect information and left to their own devices, often end up with something unsuitable.
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Richard Jennings CeMAP
Founder & Managing Director at Richard Jennings Mortgage Services
As a broker I see this as great enws for both the industry and clients alike. Whilst Amazon could Im sure have brought about cheaper policies the cocnern is that this "stack them high, sell them cheap" does nothing for anybody other than Amazon;s profit figures. Insurance is a complex field, with an array of variances to terms, conditions and policy limits. Too often we hear the insurance industry slammed for "not paying out" when in reality had the purchase been made based on needs, with tailored avice the client would have had a policy they needed, were aware of its cover limits, features, benefits and ultimately its exclusions. The same can be said for buying from aggregator sites, whilst they may get the praise from Martin Lewis for being cheap, cheap doesn't mean good. As I advise all my clients, the value of your premium is in the claim.