Lloyd’s Offers Business Interruption Coverage for Suspended Amazon Sellers

Like many people who make their living selling stuff on Amazon.com Inc., Rob Griffin is terrified of getting kicked off the site. Two years ago the Atlanta resident was suspended for selling a banned health supplement and wound up living off his credit cards for a few weeks. Amazon reinstated Griffin, but the memory lingers.

So when an insurance agent offered to sell Griffin a $1,200 policy covering up to $1 million of income lost during an Amazon suspension, he didn’t hesitate. “It was an easy decision,” says Griffin, who supports a family of five selling cats claw, garlic capsules and more. “I wanted some protection.”

In recent years, an entire cottage industry has emerged in the shadow of the world’s largest online retailer. There are consulting firms pledging to help make Amazon merchants rich. Temporary staffing agencies find workers to staff Amazon warehouses during the holiday shopping season. Now the insurance industry has found a niche, thanks to an enterprising Amazon merchant from Kentucky who sells custom bedding.

Her name is Lori Jurans, and she got the idea two years ago at an annual conference in Kentucky, where sellers like her share tips and secrets about selling goods on Amazon. During the gathering, Jurans heard one tale after another from merchants who’d been suspended.

In some cases, they’d violated Amazon’s terms by selling expired, damaged or counterfeit goods. But sellers told Jurans they were also kicked off for things beyond their control—for a late delivery from a courier, say, or because customers seeking a refund complained even if the product was fine.

Amazon, which declined to comment for this story, says it has various online tools and a team dedicated to help merchants resolve any issues. But merchants say they must navigate a mysterious process primarily via e-mail that can eat up weeks—and sometimes isn’t resolved at all.

“You’re guilty until proven innocent, and that did not sit well with me,” Jurans says. So when she was renewing a general liability policy, she asked the agent if it covered income lost after getting kicked off Amazon. It didn’t.

So Jurans and two Kentucky insurance agents set up a company called Well Insurance. For advice, they turned to InsuraTech, an Indiana firm whose chief executive Tim Craig has cultivated a strong relationship with Lloyd’s of London. The storied marketplace has long underwritten unusual niches, including policies covering Bruce Springsteen’s voice, America Ferrera’s smile and alien abductions. Craig himself worked with Lloyd’s to develop insurance that reimburses poultry farmers should they lose their flocks to avian influenza.

He hawked the Amazon policy to Lloyd’s specialty underwriters, who agreed to take it on despite the fact that Amazon provides little visibility into suspension rates or reinstatement terms. Insurance carriers are increasingly offering niche policies that protect customers against unusual risks—including guarding against such technology threats as cyber-attacks. These specialty policies help insurers offset the low margins of more traditional home and auto coverage.

The Amazon policies were rolled out earlier this month. Craig anticipates selling at least 20,000 of them this year. That’s minuscule for the insurance industry, but there are 2 million Amazon merchants in the U.S. so the new business has the potential to become a decent size one day.

Chris McCabe, who once investigated merchants for Amazon and now helps them get reinstated, believes the policies will be popular among his clients. “They need some layer of protection, otherwise they’re 100 percent exposed,” he says. “They have families and employees to support just like anybody else.”

(With Lisa Du and Oliver Suess)