Insurance holds financial services door ajar with ‘big tech’ poised to enter – Schultheiss

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Advisors are at the heart of the mortgage and protection market, and over the decades have created a virtually impenetrable defense around their ecosystem that has helped protect and grow their business.

Collectively, intermediaries have shown incredible resilience in the face of an ever-changing landscape and have quickly identified competitive threats and moved accordingly.

But while the industry has done a great job of defending its trade, there is a hole in the net that sees competitive threats slipping through the middle blockade. This has now become increasingly dangerous given news that Amazon is launching its own insurance proposition.

Amazon’s proposal

Many predict that Amazon’s home insurance launch is an exercise in testing the waters and gathering data before expanding into major financial services sectors.

Although Amazon primarily focuses on the switch market and therefore directly competes with aggregator models, this is also a problem for middlemen. Whether it’s its aggregators or Amazon, it’s the data these companies collect and the permissions they capture, which means they know a lot about your customers and can offer more essential products to an advisory activity, whether for mortgages, protection or transfer of property.

All in all, this means that aggregators – and potentially later, Amazon – can effectively leverage your unserved general insurance (GI) customers to double up and sell other products using very sophisticated marketing and large advertising budgets.

The upshot is that the only reason aggregators have grown to the scale they have is because intermediaries don’t consistently offer home insurance to their mortgage customers.

FCA assesses big tech entry into financial services

The Financial Conduct Authority (FCA) recently launched its own discussion paper on threats to competition and the likely outcome for consumers, coincidentally around the same time as news that Amazon had entered the realm of Insurance was announced, and with others who hold IG permissions, like Apple, lurking in the background.

The FCA has made it clear that when Big Tech will enter financial services probably cannot be predicted, but they will likely expand into different industries once established. Although they will likely work with partners to launch their proposals, as Amazon has done, then it is expected that more businesses, services and products will be integrated in the long term.

He also warned that while customers may benefit from increased competition that drives innovation in the short term, there are long-term risks of huge companies generating excessive market share in parallel industries given of their huge datasets and complementary product ecosystems that will be built over time.

Your data is your main competitive advantage

But despite the challenges Amazon will present, advisors still hold the ace card thanks to their “gold dust” data.

The deep understanding you have with your customers means you know for sure exactly when home insurance becomes a need. You know exactly when your client has applied for a mortgage, when they’re offered, and when they’re trading.

This data means that advisors are sitting at the crossroads of a colossal exchange of information between multiple parties and, therefore, can offer insurance before anyone else – at exactly the right time – saving that client from needing to go elsewhere with their data and Their business.

By doing this, not only will you be growing your own business and fulfilling this critical customer need, but you will be using GI as an important strategic tool that acts as a fence for your other offerings.

So while there is no doubt that advisors will have to work hard to continue to protect their business from competition over time, given that this is a solvable problem, it will lead to even better results. for clients if advisors recognize it and act quickly.

Martin Schultheiss, Managing Director of Uinsure
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