Google Compare for car insurance launched last Thursday in California, with more states to follow in the near future.
In addition to a growing list of insurance providers which currently includes Mercury Insurance, MetLife Auto & Home, General Insurance, 21st Century Insurance and more, Google has also announced a new partnership with BOLT Solutions, Inc., a leading insurance distribution platform for the p-c industry.
The insurance industry has anticipated Google’s arrival for some time. But how does the official launch change expectations about the company’s plans and business objectives? According to economist Bob Hartwig, president of the Insurance Information Institute (I.I.l.), Google is a bigger threat to other online vendors of auto insurance than it is to insurance agents.
“Had the name been anything other than Google, it wouldn’t be making the headlines it’s been making,” Hartwig says. “Right now, the presumption is that Google has a reputation of being a disruptive force in many industries. But will Google be more disruptive than the disruption we’ve already witnessed in more than 15 years of online insurance sales? That much isn’t obvious.”
One concern for other online vendors is that Google will find a way to make its own compare services appear at the top of any search on auto insurance and that it will place ads for its own service more prominently than any of its competitors, according to Hartwig. And being the most widely used online search engine has other advantages: The knowledge and information from Google Compare searches, combined with analytics, could provide the company with invaluable insights into shopper’s behaviors and preferences—data that insurers only dream of.
“They have a lot of knowledge and information about customer behaviors and what they’re doing online,” says Denise Garth, a partner at Strategy Meets Action. “Insurers don’t necessarily have that knowledge. [Google] actually has more insightful information than insurers do to really engage customers online.”
But is data alone enough to be a formidable foe? “You should not expect other online portals or other very experienced, very aggressive online vendors of auto insurance, such as Geico or Esurance, to take this lying down,” Hartwig notes. A company like Geico, he explains, is not only extremely experienced in the technique and art of online insurance sales—“it also controls the product that is brought onto the market,” he says. “That is a very large and distinct advantage it has over Google. Google does not control the terms and conditions of an auto policy. It does not control the pricing. And for the most part, it does not control the marketing.”
Most important, Geico is an actual insurer. By contrast, “Google has not put a single dollar into backing underwriting of insurance—and it’s questionable if they ever would,” Hartwig says. “They best leverage their knowledge base by using their technology as an online vendor. To become an actual insurer would require Google to tie up very large amounts of capital and become more deeply involved in the regulatory and licensing requirements that every actual insurer faces.”
And that seems unlikely, Hartwig says—consider the auto industry, for example, where rumors have been flying about Google developing a driverless vehicle. “It does not appear that Google plans to build any automobile factories anytime soon,” Hartwig points out. “But it’s developing what it hopes is a technology that could be embedded in ubiquitously throughout the automobile industry.”
The technology piece is where the tech giant truly shines, experts agree. “The service gives access to carriers for potential policy holders who wouldn’t have had the opportunity before,” says Sean Allen, vice president of North American sales at Xchanging. “Compare is a catalyst and disruptor, which may motivate carriers to finally get more advanced with technology.”
Although many have speculated Google is similarly unlikely to expand beyond auto insurance, do company partnerships like those with BOLT indicate that Google will eventually enter the commercial insurance space as well?
“I think it’s possible that an expansion into small commercial is somewhere in the three-five year business plan,” Hartwig says. “Are there going to be some potential small businesses interested in an absolutely basic business-owners policy that will simply opt to click online for that type of coverage? It’s quite possibly the case—there’s a little bit of that today already.”
“Small commercial is already evolving where auto insurance is,” Garth agrees. A handful of insurers already allow individuals, small business owners and small commercial clients to purchase coverage completely online—and all automated at that. “I think it’s the first step into other lines of business for insurance—not just for p-c, but also into life and annuity as well.”
But overall, Hartwig sees that possibility as an opportunity for agents from all channels. “It’s not a small step to move into the small commercial space,” he notes. “Independent agents and captive and exclusive agents are prepared to demonstrate and defend the value they bring to the insurance transaction with small- and mid-sized commercial risks that would most likely be the target.”
“As it grows out to more states, they’re going to introduce ratings and reviews of the products, capabilities of the insurers and link in local agent support for providers with agent networks,” Garth adds. “At the end of the day, it’s going to be about the customer, the customer relationship and what the customer wants.”
Jacquelyn Connelly is IA senior editor. Morgan Smith is IA assistant editor.
