What will the Launch of Google Compare for U.S. Auto Mean for Insurers?

Google’s auto Insurance distribution play is interesting, but the bigger play may be for the company to be a provider of what makes the industry run, not just of the capabilities the industry uses to sell.

(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.

Ellen Carney, Senior Analyst, Forrester Research.

Ellen Carney, Senior Analyst, Forrester Research.

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)

Matthew Josefowicz, President & CEO, Novarica.

Matthew Josefowicz, President & CEO, Novarica.

“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.”

Mike Fitzgerald, Senior Analyst, Celent.

Mike Fitzgerald, Senior Analyst, Celent.

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

Jamie Bisker, Senior Analyst, Aite Group.

Jamie Bisker, Senior Analyst, Aite Group.

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.

 

 

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at [email protected] or (503) 936-2803.

Comments (8)

  1. Hi Anthony,
    In addition to the ability to compare the price (premiums), the end consumers would be able to leave their feedback/reviews/ratings on the specific insurance-products they buy and about the carriers/insurers they buy from; similar to the ones found on amazon.com, booking.com, etc.. The feedback could be about claims experience, customer service experience in addition to the worthiness of the insurance-product (i.e. price versus their specific needs).
    The shopping consumers, therefore, would see both the quantifiable ‘Premiums’ and the non-quantifiable ‘Quality of Service – overall’.
    The insurers/carriers, therefore, are compelled to be on their toes, real-time, to ensure they meet the quality-of-service, the suitability of insurance-product features and the price.

    • Jeevan, these were the reasons I meant to imply that one could argue that insurers should be concerned.

  2. Should the Insurers/Carriers be really concerned? The role of Google is primarily on the sales/distribution side and the fundamentals of Insurance that is assuming risk (or underwriting) will still have to be done by the insurer/Carrier. Google would not be assuming the risk or would not be underwriting the risk of end consumers. Therefore, more than the insurers/carriers the impact of Google as aggregator is to the Agents/Brokers. The primary impact to Insurers/Carriers is that they have to be always on their toes and be very competitive, on a real time basis.

    • Jeevan, I guess I might ask you what carriers need to always be on their toes about, and what might be the consequences of their failing to do so. Insurers are challenged to achieve the kind of real-time response you recommend. One also might note that insurers have differentiated themselves along the lines of product, distribution and service; developments such as these tend to box them up in the product category. As you suggest, that is their core competency, but it does signify the potential of having to play a different game. Owning the customer is a big advantage for cross-selling, but seems it will be harder within this paradigm.

  3. Excellent comments. I do wonder whether insurers should be so concerned if Google is likely to end up a minor player. Of course, they would have to believe that rather than their darkest fears. I wonder whether Google’s limited success in the U.K. is likely to be the permanent pattern. Think about Amazon’s somewhat slow start before it hit critical mass. Google is still learning the ropes of insurance. It’s important also that we realize that what is forseeable for the future of insurance is a moving target. New things will appear plausible from year to year. It’s hard to say where Google will be in insurance a decade from now, but the present opportunity for disruption, for Google or anybody else, is in distribution, and Google is making solid, measured investments in that area.

  4. Google has not been terribly successful in the UK. There are much better and more succcesful aggregators but that is not the point. Google’s entry is a wakeup call to the industry but more critically, it offers a layer of transparency. Consumers (to generalize for a minute) do not trust insurers nor their agent partners. Oddly, they do trust Google, at least to provide information. Having access to comparative quotes is always important to convince consumers that they are getting a good deal. I know independent agencies offer a similar service but I suspect few consumers believe their agent is working tirelessly to get them a better deal. I suspect Google will remain a minor player but the shake-up effect will be far more wide reaching, and that is a good thing.

  5. I think the most interesting thing about Google Compare right now is the participation of a Big Name, namely MetLife. Could this rattle the Big Four sufficiently to drive them to onboard as well? And if so, will the presence of the Big Four there defeat the purpose of Google Compare? (Assuming for the moment that that purpose is providing a more level playing field for smaller & local carriers, a la Mr. Fitzgerald’s remark: “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.”)

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