Will Amazon disrupt homeowners insurance?

There’s no question that Amazon.com has become a dominant force in both the retail and publishing worlds. Will it do the same in the field of homeowners insurance?

That’s becoming a more important question these days, as Amazon reportedly eyes moving into the insurance business. Silicon Valley news site The Information reported last week that the company is considering whether to offer homeowners insurance.

According to Bloomberg, the market is attractive. The National Association of Insurance Commissioners tells the news agency that insurers in the U.S. and Canada generated $92 billion in premium revenue last year. But considering offering the product is much easier than actually building a business in it. Bloomberg reports:

Cracking the market won’t be easy, however. Analysts pointed to defenses including a maze of regulation and customer loyalty. And Meyer Shields, an analyst at Keefe Bruyette & Woods, said that established insurers hold troves of data that can be a competitive advantage because the industry relies that information for its models.

“I’m probably a bit skeptical about this,” Josh Esterov, an analyst at CreditSights Inc., said in a phone interview. “I would be very surprised if this is the type of industry they want to get into.” He said home coverage can create earnings volatility when storms or natural disasters generate claims, and it is time-consuming to set up the legal entities needed to underwrite risk.

There are also questions about whether a company like Amazon can deliver the kind of expertise and personal service that those buying homeowners insurance expect.

Seeman Holtz Property & Casualty is growing rapidly precisely because we do provide expertise and a high level of service to those who work with us. We believe insuring your home goes beyond price. Coverage terms and conditions, reputation, and financial stability of the insurance company should also be considered. A Seeman Holtz Property & Casualty expert can help you navigate all those considerations to arrive at the right coverage for your home.