Earlier this year, Mintel’s Insurance Marketing 2016 Trends identified that “The Google Effect” would substantially impact the industry in 2016. The trend is not about Google offering insurance, but rather the influence of Google and its peers to change the way insurance products are purchased and consumed. Two months into the year and the trend’s namesake has many questioning what the true viability of a tech giant like Google’s impact can be.
Since the news first broke that Google would be shutting down Google Compare, its quote comparison website, the debate about Google’s actual sway on the industry has only grown stronger and more sharply divided. Some were quick to point out the continued strength of independent advisers in a highly complex and regulated industry, while others identified the fact that consumer desire for online solutions is not going away anytime soon.
Millennials are twice as likely as baby boomers to consider purchasing insurance from a source like Google or Amazon
Yes, it is true that agents still play a vital role in most insurance sales, especially for commercial and life insurance where they account for 67% and 90% of business respectively. At the same time, consumers are intrigued by the concept of buying insurance from sources other than the long-established brands that dominate the industry. In particular, Millennials are twice as likely as baby boomers to consider purchasing insurance from a source like Google or Amazon according to recent Mintel research.
While the announcement from Google seemed to support the idea that traditional channels and agent sales have won out, the reasons for the lack of success are much more multifaceted. For starters Google Compare was not getting buy-in from major carriers or the regulatory approval they needed in most states. In addition, the cannibalization of Google’s AdWords model was often positioned as a cautionary tale of what may be the downfall of the comparison site and is what many experts are stating as a contributing factor.
But other external factors likely contributed to the failure of Google Compare as well. Quote comparison websites are one of the most prominent ways new startups are entering the insurance space, so Google had to be above and beyond in terms of customer experience or they were bound to fall behind, which is evidenced by Google’s statement that they aim to retool these products.
But even with a retooled customer experience, Google will be coming in late to the new world of insurance aggregators. The Zebra operates in 50 states and has already raised over $21.5M in funding, while newcomer Insurify is operating in 30 states with $2M in funding after launching its online marketplace at the beginning of 2016. These and other startups have invested in the same concept as Google, but are taking the consumer experience one step farther. Case and point: Insurify plans to use the investment to develop an SMS-based virtual insurance agent that delivers a quote based on a license plate photo.
This move gives Google flexibility to determine the most lucrative way to put its fingerprint on the industry
With that said, Google is not exiting the insurance space. In fact, this move likely gives Google more flexibility to determine the most lucrative way to put its fingerprint on an industry that is in the midst of an exciting evolution. In the fall of 2015, Google injected $81 million in capital into Collective Health, an employer-sponsored health insurance platform, $32.5M into Oscar Health, a health insurance company startup, and $60 million into Gusto, a payroll platform that has expanding into a health insurance benefits brokerage as well. That’s a total of $173.5 million in various ventures over the course of two months. Suffice it to say, interest in the industry, even from Google, is going nowhere in the near future.
In addition, the strategic decision in October 2015 to become Alphabet provides further opportunity to enter the insurance industry in a capacity that may have previously seemed unfathomable. Partnering its smart tech initiatives such as wearables, smart home systems and telematics, to provide insurance discounts, provide data for predictive analytics, or most provocatively, as an underwriter of insurance products, are just a few possibilities.
While the exit of Google from the quote comparison market is certainly noteworthy, it is not necessarily an indicator of a shift in expected trends. Consumers still crave clarity and convenience and younger consumers in particular are likely to consider new ways to purchase products like insurance in the future. Furthermore, investments and partnerships from Google and others demonstrate that innovation in the insurance space is still a top consideration for growth.
Stephanie Roy is the Director of Insights, Insurance at Mintel, focusing on all insurance sectors for Mintel Comperemedia. She is responsible for providing internal and external stakeholders with insights and analysis on trends in the Life, Health and P&C insurance industries.
