On Monday, Google Compare announced it will shut down beginning this week.
In an email to its partners, the company stated that the “service itself hasn’t driven the success we hoped for” and reported that by March 23, its exit from the insurance marketplace will be complete.
The announcement sent shockwaves through an industry that braced for disruption from Google as soon as the tech giant announced the launch of Google Compare early last year. “I thought Google would have the staying power to ride it out,” admits Deb Smallwood, founder of Strategy Meets Action.
Sean Allen, vice president of sales for Xchanging Insurance Services in North America, was also “surprised to see them come out so soon.” What didn’t surprise him, however, was that the model—which offered comparison shopping for not only auto insurance but also credit cards and mortgages—didn’t work. “They were coming into it in a mature phase of all these other online companies that were already in that space,” he explains.
Google Compare “didn’t really do anything different” and wasn’t around long enough to affect the marketplace, Allen says—which is why he cautions against reading between the lines of the company’s failure. In terms of other potential insurance disruptors, “I don’t think it changes anything,” he shrugs. “Should everyone stand up and cheer? Probably not.”
To understand why Google Compare flopped, it’s important to first scrutinize what the company hoped to accomplish at the start. “Fundamentally, Google wants to retain more traffic on their website, and they also want to manage the customer experience,” Smallwood says. “But they approached insurance in a more traditional way, not with innovation. Their solution was a typical comparative rater, and it was cumbersome.”
Beyond the fact that Google Compare didn’t boast the same customer-centric approach that many of Google’s other products and services have, “among consumers, I think it’s possible that there isn’t a high demand for self-service comparative raters,” Smallwood adds—at least, not for the type of self-service comparative rater that was Google Compare.
Essentially, after asking a series of up-front questions, Google Compare delivered a list of carriers that might be a match for a consumer’s insurance needs, says Jay Sarzen, senior analyst on the insurance team at Aite Group, a financial research and advisory firm. After that, “you’re on your own,” he points out. “It wasn’t much more than a search engine. How valuable is that if I’m a consumer looking for some guidance? Does the majority of the population really want to be that self-directed?”
For Allen, Google Compare seemed like an OK research tool—but that was the extent of its scope. “I don’t think the value proposition was strong enough to entice consumers to want to buy through Google Compare,” he says. “And if they don’t buy from there, Google doesn’t get a commission. If they’re not converting and making money, why would Google want to be in that business?”
“Just because you build it doesn’t mean they’ll come,” Smallwood agrees. “Consumers may not even know it’s available—it’s still a small percent that shop online for insurance. We’ve been talking about online quoting for 15 years, and it’s still at 12%. It’s a slow-moving needle.”
What Does It Mean?
Sarzen anticipates a “tipping point” sometime within the next 20-25 years where consumers purchase the majority of insurance online. “Everyone is very excited about the prospect of having insurance purchased through the online channel, and everyone’s right to be excited,” he says. “But at the end of the day, what it comes down to is that people, at this point in time, are still very wedded to their agents.”
That doesn’t necessarily mean every customer wants to meet you through traditional methods. “The closing of Google Compare doesn’t lessen the consumer appetite for online shopping,” points out Bob Rusbuldt, Big “I” president & CEO. “In fact, consumer shopping for insurance has exploded on TrustedChoice.com as consumers come to understand the ease of use and value added by Trusted Choice® independent insurance agents and brokers.”
While some customers will always prefer human interaction in their insurance experience, many prioritize ease and convenience above a personal touch. “I’m not saying agents have nothing to worry about,” Sarzen emphasizes. “What they have to do is make themselves just as attractive to the portion of the market that wants the online experience.”
Google Compare “failing fast” also shows agents “there’s still value for them out in the marketplace” when it comes to providing services around insurance products more complex than auto, Allen says. “Agents need to think about the larger offerings they have instead of just focusing on personal lines,” he suggests.
But Smallwood doesn’t necessarily think Google Compare’s exit is proof positive that customers need any agent contact at all when shopping for insurance. Instead, “I think it’s a proof point of how complex our industry is,” she says. “The insurance industry is going to be a tough nut to crack. It’s very complicated and highly regulated both by line of business and by state. Disruptors from outside the industry don’t get that.”
Potential insurance industry disruptors like Goji, Coverhound, Insureon and Wal-Mart’s autoinsurance.com can learn plenty from Google Compare’s failure. “I don’t think this is going to quell any enthusiasm,” Sarzen says. “I think, though, that everyone’s going to have to reexamine their value proposition.”
For example, “in Goji’s case, it’s making an absolute perfect match with its Alchemy technology,” Sarzen points out. “For Coverhound, the rubber’s meeting the road on the basis of very strong carrier relationships and impeccable service.”
In that way, Google Compare’s timing and approach was off. “This will really validate how some of these other players are doing it, which is not just spreading it out everywhere and hoping one hits the wall and sticks,” Sarzen says.
But don’t count Google out of the insurance game just yet. “I don’t think you’ll see them come back any time soon,” Allen says. “They’re not going to want to fail twice. But Google’s one of those companies like Amazon—you still have to watch them because they’re changing the models out there.”
“It’s too rich of an opportunity for Google to not be involved in,” Sarzen agrees. “They’ve got the name recognition; they’ve got the technology. How many eyeballs pass through Google over the course of a day? And how many of them are looking for insurance? My guess is Google will go back and build a better mousetrap.”
Whether it’s Google or another player nobody’s heard of yet, “if they come at it with a different perspective instead of trying to solve it the traditional way, there are pinholes of areas they can exploit and disrupt,” Smallwood says. “The insurance industry is ripe for disruption. But it’s like an iceberg being nibbled away at the bottom—it’s not going to change overnight. Disruptors need the stomach for a long road in order for that pivot to happen.”
Jacquelyn Connelly is IA senior editor.