Market Leader Professional for Agents

The pace of change in the insurance industry has been increasing in recent years. Much of this change is driven by the ease of use and speed of data and analytics. In the past year or so much of that change has occurred in the reinsurance industry with the emergence of the capital markets as a dominant force in catastrophe reinsurance.

Now, the next game changer is occurring in the personal auto insurance space. Google Auto Insurance is a platform to sell personal auto direct to consumers. Local, Main Street agents will ignore this game-changing development at their peril.

This didn’t just pop up out of nowhere. A research group called Strategy Meets Action which looked at the new competitive threats coming out of the technology companies and Silicon Valley. Their warning to the insurance industry was to insurance agency and company executives to take this threat seriously or get trampled by it.

Then, in January of this year, Ellen Carney, a researcher with Forrester Research, on what she has seen with Google Auto Insurance.

Here is what she said:

“Google Compare is going to have big implications for US insurers. While doing the research for a report on what Google Compare is going to mean for insurer strategies in 2015, I took a look at a bunch of state insurance commission filings to see just what was up with the entity now officially doing business as Google Compare Auto Insurance Services Inc.”

First, let’s look at how Google has traditionally make money. Google makes money selling advertising space on their search engine result pages with Adwords. An agency or an insurance company pays Google for positioning on the search pages in the hope that someone searching for auto insurance will click on the link to their website.

But now Google Compare is Google’s foray into directly competing with agencies. Google already has a price shopping portal in the UK (see picture on right).

And to launch their shopping platform even quicker in the US, Google has partnered with a California-based agency called CoverHound, which is a major on-line insurance shopping portal.

Google Compare: What are the potential implications of this development?

• Have the direct-sales insurers like Geico, Progressive, Esurance so commotized the purchase of auto insurance that the only thing that matters in consumers’ minds is price? What about the claims experience? Are consumers expectations of how insurers handle claims so low that they don’t ever expect a pleasant experience? What does that say about the job the industry is doing to educate consumers on what really matters?
• Will agency ads in Google get relegated to being listed below Google’s own ads for Google Compare?
• How will agencies and insurers compete with the vast amount of consumer shopping data that Google can amass?
• Is advertising with Adwords even worth the money anymore?
• How will agencies and standard line companies be able to compete against the continous downward pressure on costs? Was the a sign that some companies are throwing in the towel? What does ACE know about the personal lines business that Fireman’s Fund doesn’t?

How do you think insurers and agencies can compete with the continued migration of personal insurance to direct, internet-based platforms?

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