When Amazon introduced that it was increasing its necessities for sellers to keep up a product legal responsibility insurance coverage coverage, the responses ranged from skeptical to outright hostile.
“Do I see it proper? I’m going to get pressured to get some sort of insurance coverage, or I’ll get in bother?” one vendor wrote in a touch upon Amazon’s Vendor Central submit.
“It completely feels like what the mafia did, they simply referred to as it ‘safety cash,’” the vendor wrote. “They pressured mother and pop shops/enterprise to pay that cash, so their buildings didn’t ‘unintentionally’ burn down.”
That is perhaps an overstatement of the scope of Amazon’s coverage shift. By the letter, as of Sept. 1, Amazon is requiring sellers to take out a product legal responsibility insurance coverage coverage as soon as they attain $10,000 in gross sales in a single month on Amazon.com. Beforehand, the requirement had utilized solely to sellers who met that threshold for 3 consecutive months.
So the requirement isn’t altogether novel, however Amazon has arrange a brand new program to assist sellers discover a certified coverage, and can be signaling that it’s going to get harder on implementing the insurance coverage mandate.
Amazon didn’t instantly reply to a request for remark, however an official with Marsh, the insurance coverage dealer that’s facilitating the Amazon Insurance coverage Accelerator, defined how this system works.
The Insurance coverage Accelerator goals to “actually simplify and I’d say nearly demystify the insurance coverage course of,” Wendee Wooden, a managing director in Marsh’s Affinity Observe, mentioned in an interview.
Marsh had been working with Amazon for a number of months to arrange this system forward of final month’s announcement, Wooden mentioned. On the launch, Marsh had lined up product legal responsibility protection by means of the insurance coverage suppliers Chubb, Harborway Insurance coverage underwritten by Spinnaker Insurance coverage Firm, Hiscox, Liberty Mutual Insurance coverage, Markel, and Vacationers, in response to the corporate.
The phrases of these insurance policies differ within the particulars, however in broad strokes every of them will present sellers with comparable protection, Wooden mentioned.
These insurance policies have been all crafted to satisfy Amazon’s standards for a professional insurance coverage plan, which incorporates necessities for minimal legal responsibility limits and a measure of the monetary stability of the insurer.
“A part of our aim in that is to make sure that the carriers accessible by means of the Accelerator are financially sound,” Wooden mentioned. “The carriers have to have a minimal monetary score.”
Amazon is allowing sellers to acquire insurance coverage by means of a supplier outdoors the Accelerator, however Wooden acknowledges that, in follow, it might be a problem for the standard vendor to make sure that the coverage meets all of Amazon’s standards and safe a aggressive price.
“It’s tremendous vital that in the event that they don’t undergo the Accelerator they do their due diligence,” she mentioned.
The charges are a central a part of the pitch for the Accelerator. Each coverage varies, however the overwhelming majority of sellers Wooden has seen acquire insurance coverage by means of this system are paying premiums of lower than $1,000 a 12 months, generally within the neighborhood of $500 to $750, she mentioned.
“A lot of the sellers that we see coming by means of the expertise are ending up in what we name the minimal premium stage,” she mentioned. “It’s actually reasonably priced protection for the safety they obtain.”
After all, some sellers are grumbling that Amazon is imposing the insurance coverage mandate in any respect, although many have been both unaware that the requirement had already been in place for sellers above the $10,000/three-consecutive-month threshold, or had merely opted to not buy insurance coverage or had taken out a low-quality plan with restricted protection.
“What we’re discovering out is that most of the sellers had not bought insurance coverage beforehand,” Wooden mentioned. “They could not have had a full understanding of what their danger was as a small enterprise proprietor.”
For its half, Amazon is promising to pay professional product legal responsibility claims as much as $1,000 filed towards sellers who’ve a professional insurance coverage coverage by means of its A to z Assure program. Amazon says that 80% of the product legal responsibility claims it sees are beneath $1,000.
These conditions can come up when Amazon fields buyer complaints after which notifies the vendor if a product legal responsibility declare is filed. Amazon presents a thinly veiled menace to sellers who ignore a declare.
“If a vendor doesn’t reply to a declare, Amazon will step in to immediately tackle the quick buyer concern, bear the associated fee ourselves, and individually pursue the vendor,” the corporate says.
Amazon’s insurance coverage requirement applies globally to all sellers who meet the month-to-month threshold of $10,000 in gross sales in a month. At its launch, the Insurance coverage Accelerator is simply accessible to sellers in the US and China, although it’s anticipated to broaden to different nations.
Sellers who decide to not buy insurance coverage however meet the $10,000 gross sales mark may discover their days on the platform numbered. Wooden directed questions on enforcement to Amazon, however instructed that the corporate is severe about policing its market to make sure higher-volume sellers are adequately insured.
“Amazon will work with the vendor to implement the protection requirement,” Wooden mentioned.