The Daily Telegraph

Insurance shockwave

Reports that Amazon is to launch a comparison site in UK send shares tumbling

- By Natasha Bernal

MORE than £70m was wiped from the value of Britain’s biggest insurance comparison websites yesterday after reports that Amazon was in talks to launch a rival offering, sending shockwaves through the industry.

Experts say the prospect of Amazon launching an insurance price comparison site in Britain would be a “game changer” for the sector, which is dominated by web-based operators such as Gocompare.com, Moneysuper­market. com and Confused.com.

The US technology giant is reportedly in talks with some of Europe’s biggest insurers to feature their services on the site. Any foray into insurance would represent a significan­t strategic move for the company and an effort to crack into the UK’S lucrative financial services market. It would take it well away from its core existing businesses of retailing and entertainm­ent.

Amazon’s proposal to offer insurance pricing caused the big four comparison websites’ shares to temporaril­y collective­ly drop by £73m yesterday. They later recovered some ground.

Shares in Gocompare.com, whose main shareholde­r Sir Peter Wood agreed a £1.2bn sale of his Esure business this week, dropped by as much as 10.2pc. Moneysuper­market.com shares were down by as much as 5.2pc. Admiral, which owns Confused.com, saw shares drop by as much as 2.4pc.

The plans to launch an insurance service are not thought to involve a tieup with any specific provider.

It is unclear what type of insurance would be compared on the site. Amazon has declined to comment on the talks, which were first reported by Reuters. “Amazon has a history of being very successful,” Forrester analyst Oliwia Berdak said. “Often it takes only an announceme­nt from Amazon for stocks to fall and boards to start sweating.”

The big four insurance comparison websites in the UK make up around 85pc of the market. In 2016, Forrester estimated their combined revenues at over £1bn.

Although the insurance comparison market is extremely profitable, the big four have done little to change their services in recent years, prompting speculatio­n the sector is ripe for disruption.

“Amazon is very good at pursuing things and very deliberate in building an ecosphere that cocoons customers and means that they never have to leave their website,” Ms Berdak said.

Amazon’s huge audience, sophistica­ted technology and vast financial muscle would hand it big advantages.

A push into insurance would also fit with Amazon’s strategy to allow customers to use the site to buy an increasing­ly wide variety of products.

The company already provides some limited insurance coverage on its platform when it is linked to product purchases, under its Amazon Protect scheme. The e-commerce giant also already offers debit cards to Prime users in the US – and it could use the same strategy to entice them to buy insurance products, Ms Berdak said. The firm often offers discounts on financial products to Prime customers.

This is not the first time a tech giant has threatened to wade into the insurance industry. Google launched Google Compare in 2015 to provide car insurance prices. The service was discontinu­ed a year later after it failed to drive revenue.

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Children are interactin­g more with non-human sources, raising questions about the influence artificial intelligen­ce can have on them

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