"Is Google Buying CoverHound?” That was the question posed by Forrester analyst Ellen Carneyearlier this year, after she pored over documents related to Google’s pending entry into the auto-insurance aggregation space in the U.S. and discovered that the existing aggregator CoverHound was added to the producer license for a key Google stakeholder.

But as it turns out, Google is simply partnering with CoverHound -- and Compare.com, another aggregator -- as a gateway to the insurance carriers it hopes will eventually partner directly with them. In fact, getting a quote through Google Compare for Auto Insurance – which launched yesterday – takes you to landing pages or agents for Coverhound or Compare, Carney noted in an interview with Insurance Networking News today. “They are able to tap into the agents that CoverHound has,” she says.

Google’s size make it “scary to some folks in the insurance industry,” Andrew Rose, CEO of Compare.com, tells INN. The search giant brings a well-known history of disrupting businesses, creating top-tier customer experiences and understanding customer behaviors with data and analytics. And yet, lacking a background in the insurance industry could hurt Google’s ability to serve its carrier partners, know their needs and target the right customers for them.

“We know Google will come up with strengths in user experience, but the brass tacks will be the insurance side of it – will it work for the carriers too?” Rose says. “Aggregators need to navigate and serve both the customers and the carriers. Consumers need to win, but carriers can’t lose in the equation.”

INN reached out to MetLife Auto and Home and Mercury Insurance, two of the largest carriers involved with Google, and asked about their motivation for joining the launch. Both referred to public statements on Google’s blog. Google and CoverHound also did not reply to requests for comment by publication.

What insurers don’t want is for their pricing and rating models to be reverse-engineered, Carney says. Considering that at this early stage Google is simply serving as a different skin for Compare or CoverHound, the company isn’t really adding much to the process at this point, she explains.

It is, however, gaining access to large amounts of data – and it has the ability to learn fast and learn quickly from that data exactly how the insurance business works. “Historically, Google likes to keep that data and use it for themselves,” Rose observes.

And that kind of protective approach won’t help satisfy carriers’ skepticism, Carney tells INN.  “Google gets some interesting data they didn’t have before about risk, specifically how is the same risk priced or rated or evaluated differently by different carriers, and why,” she says. “They could become an insurance company if they want to, and this is a way they would collect information.”

So why would Google want to become an insurance company? The answer is clear, according to Carney: Google has been a leader in developing autonomous vehicles, and those have the potential to reshape the auto industry completely, with new kinds of products and policies that are tied to the vehicle rather than a driver. It is in Google’s best interest to learn how insurance is typically priced and sold in anticipation of the revolution on the nation’s roads.

“Some element of insurance could be provided with the car, or you could pay on a per-trip basis,” she explains. “And Google will probably know who exactly is in the vehicles.”

So is Google buying CoverHound? Right now, no, but the current arrangement could be a prelude to that, Carney says. CoverHound or Compare provide the gateway to the insurance companies, while Google applies its knowledge of customer analytics and data to the front end.

“When you look at aggregation overall, we’re at an interesting cusp. Companies on the wealth management side are appealing to a younger demographic that’s comfortable with robo-advisors, and we’re looking at a new wave of millenial insurance customers as well,” Carney says.

Not all insurers are scared by Google’s overtures into the business: 14 have signed on as launch partners. And in the short term, being part of the launch with such a high-profile program could be a boon to sales.

In fact, the biggest insurance carriers could be hurt most by Google’s move, as it will likely hurt their online presence, Rose forecasted. Google Compare will likely take one of the top page search spots on Google search – spots that usually go to the biggest carriers. “The online exposure then for those top insurers gets diminished. I’d be worried if I were them,” he remarked.

[See also: Aggregators Don't Want Big Insurers. Here's Why.]

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