The recent announcement that Amazon is entering the Asian Insurance market via its partnership with Acko General Insurance highlights two wider trends.

First, that the promise or (depending on your point of view) threat of disintermediation in the market is more nuanced than rather straightforward predictions of the broking houses being bypassed. Rather, the more effective usages of technology that we see provide a more direct link between the ultimate client (the insured) and the end capital provider. So in the Amazon example, Amazon provides the link to the consumer, Acko General Insurance the capital. See also the new cyber star up Coalition and its direct interfaces with the customer, backed by Swiss Re capital.

In this context those who are in the best place to utilise the capital may be those with the expertise of managing the interface with the insured (and here the brokers may have a head start) and those who provide the ultimate capital. We can see some of this in the investments made by the Reinsurance giants. 

The second trend is the incipient move away from Insurance as a “pay” model to a risk management “prevention” model. For example the potential for home insurance to be linked to connected home devices, with vendors using sensors to identify incipient risks.

This change has some fundamental regulatory and legal challenges to include:

1. To what extent can such products constitute risk transfer so as to constitute an insurance?

2. If not properly classified as an insurance how does this impact taxation, reserving and accounting obligations?

3. To what extent does an insurer/risk manager owe an obligation to the consumer/insured? For example if a sensor fails and a fire ensues does the insured/consumer have redress against the provider?

4. If not strictly an insurance does the consumer owe a duty of fair presentation?

None of these are insurmountable, but highlight that the speed of innovation does not always sit easily with concepts which have evolved over decades or longer.