Googling the future of the agent

Googling the future of the agent | Insurance Business

Googling the future of the agent
Independent insurance agents may have greeted the news of Google’s exit from the insurance business with enthusiasm, but industry figures are urging them not to read the closure as either a failure of online comparison services or a validation of agents who have shunned technology.

The search engine giant confirmed the closure of Google Compare in late February. 

An email sent to company partners said Google would start winding down and ultimately end its comparison-shopping site for auto insurance, credit cards and mortgages on March 23.

Once billed as a serious threat to insurance agents – Forrester analyst Ellen Carney famously suggested the 40,000 agencies in the US could “absolutely shrink by a quarter” – the service operated for less than a year before Google decided to pull the plug. Before it shuttered, Google Compare had launched in just four states – a far cry from the two dozen states Google said it expected to be serving by its first anniversary.

However, both partners and competitors of Google say this closure has more to do with the company’s good business sense than a sign that the online comparison model is flawed.

A corporation known for its innovation, Google has historically been quick to axe any venture that doesn’t deliver. News in March or April that Google is restructuring or forgoing certain businesses is common, and is often referred to as the company’s ‘spring cleaning.’ The closure of Google Compare fits that pattern, industry figures say. 

“It wasn’t overly shocking. It’s always been strange that Google came into the industry,” says Laird Rixford, president of Insurance Technologies Corp., the Texas-based software provider that powered Google Compare’s back-end rating system.

Rixford observes that, because Google’s main revenue source is keyword-based advertising, the extension into auto insurance essentially “cannibalized” the company’s $50- to $300-per-word revenue stream. A failure to attract some of the country’s larger auto insurers, such as Allstate or Progressive, also damaged the company.

Another reason Google Compare may have failed to take off is an ongoing reliance on insurance agents. While online insurance offerings have increased over the years, a majority of auto purchases are still completed through individual agents. And, in the more complex world of small business insurance, a November survey from the Deloitte Center for Financial Services found that 83% of American small business owners report satisfaction with their current agent.

The hands-off approach presented by Google Compare probably hurt the service, says Adam Lyons, CEO of The Zebra, an Austinbased comparison company.

“Auto insurance is a complex product, and a lot of folks underestimate that,” Lyons says. “I think Google really focused on the pricing piece, and while that approach works very well for some products, you need to be more involved and have a deeper understanding of others. Insurance is proving to be one of those.” 

The treatment of auto insurance as a commodity was one of the reasons The Zebra chose to pass on an opportunity to work with Google Compare, says Lyons, who plans to use Google’s failed venture as a cautionary tale.

“I think the lesson learned is that you need to help folks understand what insurance is as a product,” Lyons says. To that end, The Zebra is heavily focused on educating consumers through tools like carrier comparisons and a guide titled “Insurance – in Plain English.” And as always, human interaction will be key.

The same is true for comparison site CoverHound, a former Google Compare partner. CEO Keith Moore says that along with delivering value to carriers, one of the reasons for CoverHound’s success is its focus on education and nuanced advisement.

“Insurance is not a pair of shoes being sold on Amazon,” Moore says. “We feel like consumers need a trusted advisor to match them to the best carrier and not show them a list of 30 options with prices.”

Regardless of the continued importance of personal insurance consultation, agents should not interpret Google Compare’s exit as “time for a victory lap,” warns Rixford. “Agents need to remain vigilant [because] the consumer has changed over the years. Google was trying to chase that opportunity.”

Now that Google has abandoned that pursuit, there is plenty of room for other companies to take its place as a leader in the online comparison space. MIT-developed Insurify recently pulled in $2 million in seed money, and Chubb last month took out a 24% stake in CoverHound.

And though these comparison tools have their roots in auto insurance, they have not been shy about expressing interest in expanding their services to homeowners and small business lines.

With these new players nipping at their heels, Rixford argues that now is the time for insurance agents to invest in comparative raters and other technology to meet new consumer expectations.

“Don’t rest on your laurels,” he warns.