Insurance industry representatives say concerns over Google’s presence in the market are ill-founded, particularly as they relate to the threat Google and other alternate distribution channels represent to independent agents.
“The reality is this isn’t anything new,” said John Tiene, CEO of the Agency Network Exchange. “What we’re seeing on the front lines as a network of independent agents is that yes, people are using the Internet as a tool to become better educated, but we’re not seeing this flight to the direct market.”
Tiene is responding to a Sunday New York Times
piece suggesting insurance agents are “one more [job] threatened by the Internet.” The article referenced the recent entrance of Google into the auto insurance market, as well as ventures from Walmart and Overstock.com.
“There are 40,000 agencies in the US, and you could absolutely imagine them shrinking by a quarter, and the ones that are left will deal with more complicated needs and more affluent customers,” Ellen Carney, an insurance analyst with Forrester Research, told the Times
Tap deeper into the insurance industry, though, and a different sentiment prevails.
Brian S. Cohen, operating partner at Altamont Capital Partners, points out a statistic commonly used in defense of the independent channel—that while 70% of insurance shoppers begin their research on the web, the vast majority still end up in front of an agent.
“I know these comparison shopping sites seem to be all the rage, but if you look at their production—the number of policies they’re actually issuing—it’s miniscule,” Cohen said. “What’s happening is that individuals are visiting these sites to get a sense of a reasonable price, but they still want to go to a professional to figure out what’s best for them.”
Demographics also play a large role in determining who buys online and who visits an independent agent. While the accepted narrative is that young people are more accustomed to submitting vast amounts of personal information and making purchasing decisions online, Tiene points out that as consumers age, their shopping preferences shift.
“As people mature, they have a different set of concerns and issues to deal with,” he said. “Because they now have a house as well as a car, and children with risks of their own, we find they move back to the independent channel.
“The internet can only take you so far.”