Google Shakes Up the Insurance Industry: Preparing for the Aftershocks

Google’s entrance has signaled that innovation and evolution is coming to insurance–these are exciting times, and the companies that will thrive are those that will embrace the opportunity to reinvent how to serve and engage their customers.

(Image credit: Dollar Photo Club.)

Earlier this month, the worst kept secret in insurance was finally confirmed when Google officially launched its auto insurance comparison shopping site, Google Compare. The long-anticipated announcement validated a viewpoint that many in the industry have long tried to avoid: If the insurance industry doesn’t evolve and utilize data-driven approaches to protect their business, new entrants will swoop in and disrupt how the industry interacts with its customers.

(Related: CoverHound’s New Funding Round Clarifies Google’s U.S. Insurance Ambitions)

Companies like Esurance and Progressive have long found success by building their brands by consistently evolving and changing with growing consumer demands. But now that Google has arrived, what does the tech giant’s comparison site mean for the rest of the insurance companies that have not been able to meet growing consumer demand? How will Google’s decision affect an entire industry–from the way they interact with customers, to how they attract Millennial talent and price risk more accurately?

Ownership of the Customer is Up for Grabs

It’s highly unlikely that Google will become an insurance company and actually write their own business. But given how Google has disrupted other industries in the past, it’s not a stretch to assume how they could irrevocably change the industry landscape. Of primary concern is the disintermediation of the distribution ecosystem, making it more critical than ever for insurance companies and independent agents to remain relevant with customers.

The industry is in the envious position of having the infrastructure to facilitate personal connections with a deep knowledge base. If you can combine your status as a trusted advisor with a modern consumer experience, you’ll continue to own your customer relationships. According to a recent survey by Capgemini, North American consumer satisfaction has decreased 8.3% in 2014. Traditional carriers and agents need to know that relationship-building, transparency, and a stellar consumer experience online are key to keeping good business.

Don’t Fight Them–Join Them

Google entering the industry gives significant credibility and signals to the tech world that there is a market to take advantage of in insurance. Millennials know and overwhelmingly trust technology brands, and are estimated to surpass the baby boomers to become the largest consumer demographic at 75.3 Million in 2015. With the overwhelming number of Millennials who don’t like the insurance ‘experience’, it’s integral to work with tech, rather than fight it. Insurers have an opportunity to learn from the likes of Google and others to stay relevant with Millennials.

(Related: Dissatisfied Millennials Bring Down Positive Insurance Customer Ratings–Capgemini Report)

Multiple studies show that Millennials are dissatisfied with what the insurance industry offers today–both from a product and customer service perspective. One of Google’s partners,, has built its innovative platform to make complex purchases like insurance approachable and more compelling to the everyday customer, allowing small and mid-sized carriers to remain competitive by offering a consumer experience and awareness that these companies cannot begin to offer.

For those who believe Google doesn’t apply outside of personal auto, it’s far too soon to make that claim. While the extent of Google’s partnership with CoverHound remains to be seen, they do provide offerings for renters and homeowners insurance. According to a recent J.D. Power study, the largest gap in satisfaction for Millennials is in both renters and homeowners insurance, more so than with any other generation. It wouldn’t be hard to see how Google could have a head start on tapping into these markets with fast, quick and cheap services. We believe small commercial insurance is next, assuming success on the personal lines side.

How to Remain Competitive

There’s a relentless mantra from tech companies to provide products and services better, faster and cheaper. For this reason, pricing sophistication is an important priority and a necessary first step in staying competitive. Third-party vendors provide an affordable way for small and mid-sized insurers to price risks with precision and not allow themselves to be pressured by market forces into taking on risks at rates that will cause them to be unprofitable. Insurers can now be on the offensive and consistent with their pricing in order to combat the cheap prices offered by new entrants. Maintaining underwriting profitability has become a top priority to make up for the lack of investment income, which has never fully recovered since the Great Recession in 2008.

Instead of accepting and maintaining the status quo, there are options and solutions to remaining competitive.

  • The way to win against new entrants is to know what you insure. If you’re going to stay ahead of big trends and maintain profitable margins, you have to be better at selecting risks that fit your business and price them accordingly.
  • Using data analytics to evaluate options allows you to test and learn, select the best approach, and deliver results that make the greatest strategic impact. Companies like Google thrive on the test-and-learn approach, and insurance companies must innovate to keep up.
  • Finally, it’s time to accelerate the journey to becoming a data-driven decision organization. There are now a handful of insurers using predictive analytics in specific areas of their business, but insurers that aren’t overhauling organizational culture to think with a data-driven mindset are already behind.

The future is now the present, so it is no longer acceptable to continue doing “business as usual” simply because it’s the easy answer. These new entrants are data-driven and tech savvy, and they understand how to deliver a modern consumer experience. There is a silver lining, however. Google’s entrance has signaled that innovation and evolution is coming to insurance–these are exciting times, and the companies that will thrive are those that will embrace the opportunity to reinvent how to serve and engage their customers.


Dax Craig // Dax Craig is the co-founder, CEO and president of Valen Analytics, a provider of proprietary data, analytics, and predictive modeling to help all insurance carriers manage and drive underwriting profitability. Valen leverages its large contributory data assets to help carriers price insurance policies more accurately and achieve lower loss ratios. Prior to founding Valen in 2004, Craig was founder and CEO of Xertex Technologies, which was acquired by global leader in the wireless antenna industry, Centurion Wireless. Craig served as VP of global business development at Centurion, where he was directly responsible for global business development including sales, market definition, market segmentation, market research, strategic planning, and market development.

Comments (10)

  1. “There’s a relentless mantra from tech companies to provide products and services better, faster and cheaper. For this reason, pricing sophistication is an important priority and a necessary first step in staying competitive.”

    So price trumps being more knowledge about one’s insurable risks. Are we to believe that consumers less likely to compare the actual wording, terms and conditions of basic auto policies as opposed to comparing each policy’s price? What if consumers were offered a service where the actual auto policy is provided, along with a summary of the policy benefits, and a database that compares all policies; do you doubt there would be some interest in such a service?

    In a recent review from Forrester Research, Insurance Snoopers services were mentioned among 55 firms within the insurance industry including Wells Fargo, Aflac, Humana, etc because its services are ‘better, faster and cheaper.”

    Check it out at and Forrester’s report entitled, Trends 2015: North American Digital Insurance.

  2. Sorry to point out the obvious, but the article is written by an individual who’s business is big data collection/analytics. Are some of his points valid? Sure. But in evaluating the content, make sure you are viewing the movie through that lens. In my experience, people buy from people. And thank goodness for that. It’s why I’ve been successful for 20 years serving my satisfied insurance customers.

    • Sharon, thanks for the comment. Certainly, it’s always wise to ask, “Cui bono?” Our view at IIR is that vendors often have excellent insights because they are putting their money where their mouth is, with regard to R&D and strategy product decisions. That said, we only accept thought leadership pieces free of product references. As you say, there’s an obvious element of self-interest, but that ad hominem observation doesn’t invalidate a given opinion. We consider our readers sophisticated enough to consider the source and we can only hope that they’ll join in the conversation whether to agree or disagree.

  3. “Google Compare”…The Latest “Apples to Apples” Auto Insurance Comparison Illusion

    Google has launched its “Google Compare” auto insurance comparison website for California consumers, perhaps Google’s first step towards a deeper immersion into the multi-billion dollar auto insurance marketplace. Right now, nothing really differentiates Google Compare from the many similar comparative rating websites, but it adds to the illusion that consumers really can compare insurance products and reach purchasing decisions online. Caveat emptor anyone?

  4. Call me skeptical. Insurance is a complicated business and requires expertise in many areas. In addition, the margins are small and the markets are very competitive in consumer lines. I don’t think it will be easy for Google to be successful in the insurance business.

    • Hillel, is it as much a case of Google’s success as that of competing insurance companies, especially those who can now punch above their weight, marketing budget-wise, with the help of Google’s brand?

    • Hillel, it’s good indeed to remain skeptical, as many have been confronted with yet- unproven challenges, as DEC was of the PC business, or Kodak of digital photography, as millions of business leaders were of the “latest CB radio craze,” i.e., the Internet. But it’s also good to continually question your skepticism, especially when it’s grounded mostly on what’s worked so well in the past. And let me resort here as well to a very well-known and decidedly non-Millennial meme, You don’t need a weather man to know which way the wind blows.

  5. Interesing piece. It does give a bit to much credit to both Google and millenials. There are some very basic and I think obvious changes that can take place before the massive shift occurs. Not sure why whey are being ignored. Simply think of how Zappos and Amazon treats you.

    • Obviously, let Billy speak for himself, but I think he already effectively did so in referencing Zappos and Amazon, where the mantra has always been not just Customer First but Customer Delight. The mantra of most all insurance companies and insurance agents (captive or independent), on the other hand, is largely Sales Goals and Sales Quotas, that is to say, Company First and Me First. That the very best agents, sometimes rallied and supported by the very best companies, operate more often and more successfully by the Customer First rather than Company/Me First model, is simply the exception that continues to prove the rule.

Leave a Comment