Bill Suneson is the Co-Founder and CEO of MassDrive Insurance Group, LLC – The company behind MyLifeProtected.com and MassDrive.com
The news spread quickly that Google was closing its auto insurance comparison shopping platform this week and there was a collective sigh of relief from many in the industry. After all, it was only a year ago when Google Compare was launched and agents were told to ‘be afraid, be very afraid” while carriers were encouraged to get on board quickly or miss the train. Despite a very loud “told you so” over the last two days, I would hardly say Google is out of the insurance business and can think of $300 billion reasons why.
If you consider the simple economics, Google is doing just fine with paid search and continues to play a crucial role in the value chain. The one-time payment made by a carrier (or agent) for a policy was probably far less than the revenue that could have been generated for the many clicks that led to that policy. More importantly, Google has unmatched access, data and the resources needed to dominate the business as an agent or a carrier. They chose to launch as a comparison shopping site this time but may come back and want more value from the premium or policy renewals.
It is important to recognize there is a clear difference between an online shopping site or aggregator and a digital insurance agency. Online shopping sites provide consumers with an opportunity to compare rates and coverage options and then drive applicants to a company they choose. Typically, the chosen company works directly with the consumer to bind the policy and ultimately owns the relationship. This model is very successful in the UK and Google built their pilot around this process in the US.
Accenture reported that 67% of consumers are willing to buy insurance from a non-insurance provider”
A digital insurance agency provides the same comparison service, but also provides all of the value consumers have come to expect from independent insurance agents and generally owns the policy renewals. In full disclosure, we created MyLifeProtected.com to be a full service digital insurance agency where consumers can shop multiple companies for car and home insurance (and other products) with the support of a dynamic mobile-first user experience and guidance from licensed agents on the phone.
For both digital agents and online comparison sites, underwriting quality matters and many carriers have become increasingly concerned with the overall performance of the policies generated through these channels. Auto insurance shopping platforms provide value to consumers and a steady flow of new policies to carriers and participating agents. However, the lead gen game can be dangerous for underwriters when the majority of new customers are just shopping price. Coverage limits and retention rates will be low and the claims will pile up.
Despite their exit, Google’s pilot was just the beginning and the disruption to existing models will continue. In fact, Accenture reported that 67% of consumers are willing to buy insurance from a non-insurance provider. This means trusted brands that understand consumers needs and have the digital/mobile utilities to meet those needs could be disruptive and very successful in our industry. As an affinity insurance business, we welcome these new entrants and have built the infrastructure to enable them to benefit from the trends that are likely to shape the future of insurance distribution.