has been described as for insurance. The aggregator, which originated in the UK as a project of Admiral Group, is now operational in the United States and is partnering with 40 carriers nationwide. Andrew Rose, Compare’s president and CEO, spoke with INN about how Compare’s business model levels the field for smaller insurers, and what Google is doing in the insurance space in the UK.

Insurance Networking News: How would you characterize the U.S. insurance landscape?

Andrew Rose: The little guys out there are struggling for consideration. The big four insurers account for $3 billion of the $6 billion dollars insurers spend on advertising each year. Where will we be five years from now with all of these other 300 or more smaller carriers? How many of them will still exist? The pressure of the advertising from the big four is going to weed out everybody else. When the new-business flow stops, their expense ratios go up. When their expense ratios go up, they've got to raise their prices. When they raise their prices, they're less competitive. Then they get even fewer new-business policies, and then they start to lose their renewal book.

INN: So why are aggregators important?

AR: We bring flow to these smaller competitors: business consideration that they couldn't get on their own. And that's why we think we've skyrocketed to 40 carriers working with us. Many of them say this is a way to remain a part of a consumer's consideration. They don't have to spend the money -- we don't charge the carriers unless the customer purchases from them. It is, in many cases, a low-to-no risk investment. You put your rates up there and nobody buys; you don't get a bill at the end of the month. And that's an enormous benefit.

INN: What if the larger carriers signed up?

AR: We think even the biggest carriers will eventually come on the platform, but one of our biggest concerns right now is, 'What if one of them wants to come on now?' If they did, they would have enormous brand presence. We do consumer surveys all of the time. One of the questions we ask is: The last time that you shopped, who did you consider? And it was stunning. In one of the surveys we did back last fourth quarter, we almost got no names outside of the big four. And, if you are an executive in another insurance company, you should be terrified because that means consumers are not even considering you.

INN: Google is involved with comparative rating in the UK and is bringing it to the United States; what are they doing and how is it different from what you do?

AR: I can't comment on what they're going to do in the United States. What I will talk about is what they do in the UK and what it is hypothesized they will be doing here. In the UK, they bought a comparison site called Beat that Quote. It is like the other big four that are over there already:, Go Compare, Money Supermarket, and Compare to Market. It is a very small competitor in the UK. It represents about 2 percent market share, where all of the other ones represent closer to 25 percent. It is our belief that they are going to do something like that in the United States. When we search for a generic auto insurance term in the UK, you get the paid links at the top, where people have paid to advertise and then you get the organic search. In the UK, they have taken the third spot for Google Compare. Effectively, they advertise their own wares there.

From a consumer’s perspective, maybe that's fantastic. From the carrier or agent perspective, maybe that's quite scary, because all of a sudden you're losing another opportunity to represent your brand. They're essentially taking one of the spots. Our philosophy in the U.S. is: anywhere a consumer wants to shop, we want to be. There are other sites that do estimates or calculations. That's fine, but you can't buy a calculation. We think that our value proposition of offering real, unbiased, accurate, bindable quotes to consumers in real time will win.

[See also: Google and Insurance: One Year Later]

INN: But doesn’t this make all insurance a commodity anyway?

AR: There's another fallacy. Only half the people on our site buy the lowest price. The other half buys something other than the lowest price. What that tells you is, for some consumers, this is a commodity; and, for other consumers, it's not. And that's where the big guys coming on the platform could cause damage to the rest of the panel, where their brand rate - even if they are $50 to $100 more - is so impactful that people will buy that one. All of a sudden it diminishes the relative competitiveness of the smaller guys on our platform, even though they may have the lowest price. Now, over time, consumers will be conditioned to consider the little guys as much as the big guys, if our business works like it has overseas. That will be OK a couple of years down the line. But that is what we're concerned about: that people will end up purchasing the big brand over some of the other guys when the smaller insurers should be winning that business.

INN: That would limit your pool of potential participants from the carrier side.

AR: It just diminishes the value proposition. It's the needle that we're trying to thread. Ultimately we want to ofer the consumers the best possible value proposition. And sometimes that means lowest price, and sometimes that means the biggest brands. And so we have to get the timing right on when we want to add the biggest carriers because we need to make sure that the little guys have reached the point of sustainability – for themselves and on our platform – before the big guys come in and put pressure there as well.

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