Ten years ago, the “amazonization” of the insurance industry seemed an almost certain fact. Not entirely justified, thinks Amélie Breitburd, CEO Lloyd‘s Europe. ”It is especially important that the fundamental solidarity role of the insurance industry is now better understood.”

Sometime in the late 2010s or early 2020s, the word amazonization must have first surfaced in trend analyses. This phenomenon refers to the wholesale disruption, initially occurring across retail and e-commerce, thanks to the presence of Amazon.com. In Jeff Bezos’ platform business model, Amazon started competing with other third-party sellers and brands to attract customers to the marketplace and to promote its own brand. Soon many were predicting imminent amazonization for a variety of industries. This included the insurance industry, but on the brink of this century’s fourth decade, reality looks different.

Amélie Breitburd

Amélie Breitburd

CEO Lloyd‘s Europe

From coffee to machine learning

Important trends such as artificial intelligence and machine learning have certainly grown stronger over the past few years. In our industry, they caused pricing and claim handling to strengthen. But a model that disrupts a worldwide insurance marketplace like Lloyd‘s has not seen the light of day. Lloyd‘s has succeeded in maximizing a range of key features with digital as a lever for efficiency. At the same time, it maintained the mission of ensuring a fair price, just as it did with coffee in the 17th century.

New disruptive marketplaces invariably encounter a high entry barrier in the insurance industry. The reason almost speaks for itself: our business is all about trust. Lloyd‘s has built 400 years of accessing licenses all over the world. Moreover, at the entrance you have a central fund. There is solidarity and trust. Everyone has to behave in the insurance industry. You get an envelope of consent at overall market level. Those are barriers to other platforms. These barriers can be overcome, true, but it is a big step between entering the market and disrupting it. That‘s precisely why, now in 2030, traditional insurance companies and platforms still represent the largest share of the market.

Mutualization across the moon

The disruption may have failed to materialize, but we can still note that the reflection on the amazonization has initiated some important changes. Everyone has understood by now that it is necessary to see insurance fully global. It is important to deal with insurance in a fully cross-boarder way. We now understand the need for mutualization across the planet, even across the moon and Mars. Back in 2022, such a statement may have sounded like science fiction, but in the meantime it is clear that insurers are more than ever a key player in enabling risk-taking. Traveling to mars? Then you need an insurer, right? Not for the traveler himself, but for those who stay on earth. The sustainability efforts in the twenties are very illustrative in this context as well. Insurance companies have been mastering the investment side of ESG for some time, but we now see that great progress has also been made on the contract side, in terms of liability. Insurers have taken a central role in a transformation process where capital is directed to investments.

Sense of purpose

In line with this, the understanding grew that the sense of purpose is a main element in the attractiveness of our industry. The fundamental solidarity role of insurance has, unfortunately, long been insufficiently understood. Insurance coverage is now better and more widely understood. If a systemic risk arises, it is important that there is wider coverage. Mutualization is a tool and brings insurers very close to the sustainability goals linked to the ‘S’ in ESG.  

Public-private partnerships

This brings us to a third important evolution: the shift to prevention. We see that distribution has not been squeezed out of the platform game, because it was able to adapt and demonstrate its value. Especially for large risks with low frequency, prevention is here to stay, with the support of technology and a strong understanding of the risks. Through public-private partnerships (PPPs) between insurers, reinsurers, governments and supranational organizations, government schemes have become an incentive for prevention. Insurers have supported people to get more insured by 2030. This is a core reason why our industry has remained strong despite all the amazonization predictions.

About the interviewee

Amélie Breitburd has been CEO of Lloyd‘s Europe since spring 2021. Lloyd‘s Europe brings the scale, expertise and capacity of the world‘s specialist insurance market closer to its customers in Europe through a locally staffed and regulated insurer. Prior to joining the European arm of Lloyd‘s, Amélie Breitburd had almost thirty years of experience on the job at companies including BDO, Allianz, KPMG and Axa, where she was Executive Board Member and CFO UK and Ireland.

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