The insurance industry’s investment in new technology has been surging for some time. If you need proof, check out the most recent data from CB Insights, which said global insurtech funding was at $10.5 billion through Q3 2021, which was 48% greater than 2020's year-end total.
But while technology company encroachment into the insurance business has been evolving more slowly, it’s coming. And it’s coming with the blessing of consumers who are ready and waiting to buy policies from tech giants Amazon, Google and Tesla, as well as from popular brands not normally associated with insurance, such as CVS, Ford and Zillow.
According to a new survey from Breeze, a disability insurtech, 55% of American consumers would be interested in buying an insurance product from Amazon over traditional insurance carriers. About 66% would consider buying auto insurance from an automobile manufacturer such as Tesla, Ford or Honda; 61% would purchase renters and homeowners policies from a real estate company such as Zillow or Trulia, and 59% would think about buying health or life insurance from a pharmacy such as CVS or Walgreens.
The online survey was conducted between Jan. 4 through Jan. 7, with 1500 respondents, Breeze said.
“Insurance is moving toward efficiency driven by technology, data and predictive analytics and it’s getting away from the legacy operations defined by human underwriters, nine-to-five dealmaking, and cumbersome processes,” the Breeze report said. ”It’s an opportune time for tech companies to get a seat at the insurance table. They already have robust data and technological infrastructure that could be leveraged to underwrite and sell insurance products.”
Not all tech companies fared well in the survey. While Amazon may be the most trusted by consumers to offer insurance products, only 38% of respondents said they would consider buying insurance from Facebook, now called Meta. This percentage is well behind the 46% who said they were open to buying insurance from Google.
“This may signify consumer trust issues for Facebook as it battles a seemingly never-ending supply of scandals that have led to a total company rebranding,” Breeze said.
But Google’s parent company Alphabet already has a subsidiary that launched a health insurance brand called Coefficient Insurance. It also acquired Fitbit, which gives the company access to huge amounts of health data for use by an insurer.
“By leveraging their information and analytics to state firms, these companies could create a new stream of digital resources,” according to a report by PropertyCasualty360. “Carriers can turn to such firms and form partnerships through which niche insurance products can be personalized. Tech companies bring a burst of creativity to the insurance market, setting a new standard in product distribution."
Meanwhile, of all the hypothetical questions asked, consumers were most receptive to buying auto insurance from carmakers such as Tesla, which first launched an auto insurance product in 2019 in California. It then launched a similar product in Texas and Illinois and is looking to expand into Washington state. Tesla head Elon Musk said auto insurance for Tesla vehicles could account for 30% to 40% of its overall business in the future. Tesla's auto insurance automatically adjusts premiums based on real-time driving behavior.
CVS Health wrapped up its $70 billion merger with Aetna in 2018 with an aim toward lowering health care costs by combining funds and analytics. Walgreens might be a step ahead, however, as it is reportedly thinking of buying Evolent Health.
A slight majority of respondents, meanwhile, said they'd be interested in buying disability insurance from an HR and payroll company such as Zenefits or Intuit Quickbooks.
Breeze’s survey confirmed other industry findings that say consumers are wanting an easy, transparent, Amazon-like shopping experience when buying insurance.
“A computer needs only a couple of minutes to underwrite an insurance policy,” Breeze said.
Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].