Amazon is likely to partner with insurers to reduce losses and bring down premiums through smart home technology, Morgan Stanley says.

Rumours have been swirling overseas that the online retail giant may move into the home insurance market.

But a capital-intensive business model, earnings volatility and regulation would make Amazon shy away from offering cover itself, Morgan Stanley says.

Instead, Amazon may act as a selling agent, capturing a portion of home insurance commissions.

Smart home technology such as smart meters, smoke detectors, security systems and automatic water shut-off valves may reduce losses and affect premiums, Morgan Stanley says. Such devices could reduce home risks by 40-60%.

Amazon is also developing robots that could monitor home threats, according to media reports. Selling home insurance could deepen Amazon’s Echo ecosystem and connectivity to users’ homes.

Amazon has refused to confirm the rumours.