(Image source: Google.)

One of the insurance industry’s “worst kept secrets” has been shared openly with the launch of Google Compare for U.S. car insurance, an online aggregator and comparison site designed to provide a seamless, intuitive experience for customers researching and buying car insurance—and for the carriers and agents trying to reach them. The debut follows the online service provider’s launch of Google Compare (google.co.uk/compare/) for the U.K. in 2012, as well as motor insurance-specific subsidiary site google.co.uk/compare/carinsurance.

Google announced that the site is live for doing business in California, with more states to follow soon. Google named Mercury and MetLife as insurance carrier partners in the endeavor; Bolt Solutions announced its participation as an agency in Google Compare for U.S. auto in an interview with Insurance Innovation Reporter.

(Related: BOLT Solutions Joins Google Compare Auto Insurance)

Google’s announcement states that the site will introduce ratings and reviews, as well as support for carriers with agent networks. “Participation in Google Compare is based on a flexible, cost-per acquisition (CPA) model, but payment isn’t a factor in ranking or eligibility,” the announcement stated, providing a link for companies interested in joining Google Compare.

Customer Ownership Fears

Insurers have long discussed—often fearfully—the potential of Google and other online service providers, such as Amazon, to use their technological expertise, data strengths and customer experience capabilities to compete for market share on the basis of customer ownership. A recent study by The Economist found that insurers feared non-insurance entities like Google more than other competitive threats over the next decade. An Accenture study found that two-thirds of insurance customers would consider buying insurance products from entities other than insurers, including 23 percent who would consider buying from online service providers, such as Google and Amazon.

(Related: Consumers Happy to Make Amazon, Google their Insurance Company – Accenture Survey)

“Google’s mission is to organize the world’s information; and insurance prices, like airline ticket prices, fall under that category,” comments Matthew Josefowicz, president and CEO of Boston-based research and advisory firm Novarica. “Insurers already deal with comparative raters in personal lines so, in a way, Google is just the latest and potentially most important entrant into that market.”

The question that remains, Josefowicz adds, “What additional opportunities will Google see once it has a few years’ worth of search and quote data to work with?”

In the meantime, Google may develop offers to target customers for its agent and carrier partners based on data collected and analyzed as part of the quoting process, suggests Mike Fitzgerald, a senior analyst in Celent’s (Boston) insurance practice. For the immediate future, Google’s entry is likely to have the greatest impact a limited but important number of insurance shoppers.

Wakeup Call for Insurers

“Celent research shows that innovation in insurance matters most to those consumers who are the most frequent users of financial products and who use technology more frequently than others,” Fitzgerald comments. “So this announcement will appeal most to a high-value segment of the general population.”

To the extent that Google’s entry triggers fear among insurance carriers, it could be a spur to badly needed innovation, in Fitzgerald’s view. He recalls a veteran commercial lines underwriter commenting during a period of all-time low prices that, “What we need is a good catastrophe that will harden the market.”

The entry of Google could function in a similar way, Fitzgerald suggests, jarring insurance executives out of their belief that gradual approaches to technology and business change are adequate. “The insurance industry as a whole is making incremental investments in developing processes and hiring people to determine what innovative approaches will work, though until now they have only been playing around the edges,” he says. “It would be salutary for the industry if this move were to provide a wakeup call regarding outside players’ potential for entering the market and disrupting the status quo.”

California Only the Start

If Google’s entry into the auto insurance distribution world has the capacity to be disruptive, that disruption will not be limited to California. As Forrester Analyst Ellen Carney noted in a Jan. 7 blog post, Google is already licensed in more than half the states in the Union. Google has also received authorization to transact business on behalf not only MetLife and Mercury, but also Dairyland, Permanent General Assurance, Viking Insurance of Wisconsin, and Workmen’s, according to Carney’s research. Others are likely waiting in the wings, she suggested.

Carney’s blog also noted that Meredith Stechbart, the corporate treasurer of Google’s insurance entity, had added established California-based auto insurance aggregator CoverHound to her California producer’s license. Carney commented:

An acquisition of CoverHound gets the Google insurance entity to market faster in the US than they’ve been able to get  on their own; it gets them a national full service independent agency with more insurers that have already signed on; CoverHound’s San Francisco headquarters is conveniently close to Google’s Mountain View Campus; plus CoverHound gets Google the kind of insurance chops that the company will really need should they decide they really like the insurance business.

Carney speculated that finalizing such an acquisition could account for multiple delays in the launch of Google Compare for U.S. auto, which most recently had been expected to debut in Dec. 2014. Whether such a consideration affected the timing or not, no mention of CoverHound appeared in today’s announcement from Google.

Tip of the Iceberg

Google’s entry to the U.S. auto insurance market provides an opportunity for carriers to offer products to a wealth of customers they might otherwise not have access to, but it suggests even greater possibilities, opines Eric Gewirtzman, CEO, Bolt. “We believe this is just the tip of the iceberg when it comes to how consumers will ultimately shop for and buy insurance,” he comments. “For us, it is all about helping carriers exceed the needs and expectations of consumers, no matter how they want to do business.”

Google’s ability to collect, store and analyze vast amounts of data provide the means of differentiating itself in the market as an aggregator, but a more threatening long-term role is suggested by those same capabilities. In the future, the firm could be a provider not only of special distribution strengths but also of unique rating and pricing capabilities, according to Jamie Bisker, an analyst with Aite Group. “The distribution play is interesting, but the bigger play may be as a provider of what makes the industry run, not just of the capabilities the industry uses to sell,” he says.