Will Customers Turn to Big Tech?

Would people go to companies like Amazon, Facebook or Google for insurance? Zillow or Trulia for renters insurance? CVS for health insurance?

A person's hands writing an insurance forum. There is a laptop that is off to the side and a plant whose shadow is reflected on the table.

Since I got involved with ITL nearly 8 1/2 years ago, a vague threat has been hanging over the industry: that Big Tech would somehow invade and capture all the profits in much the way that Amazon did with retail commerce. That obviously hasn't happened -- but a recent survey shows that customers remain at least a little Big Tech-curious. 

The survey of 1,500 consumers, by Breeze, found, for instance, that 55% of consumers would be inclined to buy a hypothetical insurance product from Amazon over traditional insurance carriers. Fewer than half said they'd prefer Google or Facebook to traditional carriers -- but if the 46% who said they'd prefer Google and the 38% who said they'd prefer Facebook actually bought from a Big Tech company, then the whole industry would be turned upside-down. No company has a 20% market share in any insurance line, so Big Tech could become the dominant player if even a fraction of customer interest were turned into purchases.  

The potential threat doesn't stop with Big Tech, either. The Breeze survey found that "66% would be interested in buying auto insurance from an automobile manufacturer like Tesla, Ford, or Honda instead of from a traditional carrier." (I've written about how interested car makers are in selling insurance.) "61% would be interested in buying renters or homeowners insurance from a real estate company like Zillow or Trulia instead of from a traditional carrier.... 59% would be interested in buying health or life insurance from a health and wellness company or pharmacy like CVS or Walgreens instead of from a traditional carrier.... 51% would be interested in buying disability insurance from a payroll and HR company like Zenefits or Bill.com."

Now, we all know that surveys are flawed, and they're especially unreliable when a hypothetical product or service is involved. I remember the chairman of Compaq once complaining to me in advance of a much-hyped announcement from IBM that hypothetical products always had "infinite capability and zero cost." (The product line was, in fact, a bust.) Who knows what sort of product an Amazon, Walmart, CVS or Zenefits might come up with, or how customers would react when it comes time to sign a policy? 

But the mere fact that so many customers express interest should, I believe, reinforce the need for insurers to maintain a ruthless focus on the sort of operational efficiency (and, thus, low cost) and easy customer experience that makes Big Tech so attractive. Those companies may never make a major incursion into insurance -- but it'd be best to be prepared in case they do.