Should Amazon sell insurance

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Google discontinued its Google Compare service after a year. The decision, like most decisions at Google, was based on performance. According to public reports, Google enjoyed only 10% of the expected traffic in the four pilot states. Missing a goal by 90% seems a good reason to stop the service.

The launch announcement of Google Compare in 2015 alarmed many insurance agents. The shutdown, on the other hand, was noticed only by those who followed the technology news. Google is an amazing tech company. Many of my Googler friends define Google as "geeks heaven." I can only speculate to the true reason Google Compare failed.

For starters, let me remind you that Google's core business is selling ads and that Google search drives that traffic. Google's critics would like Google to improve on: user experience, customer service and promoting Google non-search products. The first two items are critical for insurance and financial services. Google has services, and can develop new B2B services for the insurance industry. e.g. tools for commercial lines underwriters.

Google Venture is investing in new InsurTech companies. e.g. Oscar and Lemonade, and partnering with insurance companies. e.g. Liberty Mutual and AXA. However, instead of building its own capability, Google is partnering up. It will be interesting to see Google, or another tech giant, acquiring a conservative insurance company and integrating it to Google's culture.

Amazon is a different story. When you think about Amazon what comes to mind? Superb supply chain management, distribution, AWS, Alexa, recommendation engine and the other Netflix, which is not Hulu. Amazon already exhibited its ability to penetrate a new industry. For example, today Amazon is a content creator that hires movie producers. Amazon has the ability to provide value also to the insurance industry. I argue that, if Amazon penetrates the insurance market,  it should not compete over personal lines as an insurance company. It should not act as a broker. It should offer infrastructure services (AWS). For example, power up insurance customer facing applications with AI and ML as a Service. The other thing that Amazon can do is to introduce its own insurance product - insurance for items. Amazon controls "points of payment," distribution, a drone fleet (future) and recommendation engines. It can be a valuable player in personal risk assessment and after catastrophe.

I will take this conversation one step further and argue that Target should also enter the insurance space. Target is known for its customer behavior patterns and prediction models. Insurance companies have a lot of data, however, they struggle to take an action because of various reasons. While the insurance companies build their personalization middleware and big data lakes, Target can offer them "Life Change Indicators System."