Amazon Wants to Sell Life and Health Insurance in India

Amazon is in the process of registering with Indian regulatory authorities to sell life, health, and other insurance to consumers there. Per Bloomberg Quint:

Amazon India wants to start by selling life, health and general insurance, according to its filings with the Registrar of Companies. The Seattle-based giant said it aims to carry out the business of soliciting, procuring and servicing insurance as a corporate agent…

Amazon has yet to seek an approval from the Insurance Regulatory and Development Authority, a person in the know told BloombergQuint requesting anonymity. A company spokesperson, in an emailed response, however, confirmed the plan, saying Amazon Pay is looking to “serve the needs of customers around insurance. Stay tuned”.

Our take:

India is a strategic growth market for Amazon, with intense competition from Walmart’s Flipkart and others (Flipkart is in the process of seeking approval to sell insurance as well). Like with its new Amazon Pay EMI service, Amazon has consumer data that should help it to assess risk and lower fraud rates. Amazon is also rumored to be exploring the insurance markets in the US, UK, and other countries as well.

Amazon Launches Amazon Pay EMI in India

In an effort to extend credit to millions of Indians without credit cards or other desirable methods of short-term financing, Amazon has launched Amazon Pay EMI (“Easy Monthly Installments”) in India through a partnership with Bengaluru-based Capital Float. Per the Economic Times of India:

“Our aim is to target the next 70 million customers who are deprived of credit options while shopping on Amazon, they will be significantly benefitted by these easy EMI options especially with the festive season round the corner,” said Vikas Bansal, director, emerging payments at Amazon Pay…

“The advantage that Amazon can bring in is the huge customer base that we already have here, hence customer acquisition cost will be lower and we can pass off better rates to good borrowers,” said Bansal. “Also we will use our machine learning capabilities to reduce frauds which will also make loans cheaper.”

Amazon claims to be offering zero cost EMIs for customers taking the loan for a duration of three and six months. For those opting for the duration of nine and 12 months the rate of interest will be 18%.

Our take:

India is a strategic growth market for Amazon, with intense competition from Walmart and others (Flipkart is aggressively pushing its Debit EMI product as well). Amazon has consumer data that should help it to assess credit risk and lower default and fraud rates. Extending credit to Indian consumers should help increase cart size and share of wallet.