Insurance IT Experts: Google Can’t Reverse-Engineer Risk
When the long-awaited Google Compare for auto insurance aggregator launched last week, the largest U.S. P&C insurers were conspicuously absent. Industry observers commented that there was a latent fear that Google could “reverse-engineer” the auto insurance business through its connection points with carriers. So by their absence, the largest insurers were sending a message that they don’t want to give away core parts of their business such as their rating algorithms to a data- and cash-rich company that has been rumored to have eyes on being a carrier.
However, insurance technologists who spoke to Insurance Networking News say that fear is largely unfounded. Adrian Brown, a P&C consultant who has been the CIO of several insurance companies most notably the trucking insurance carrier Canal Insurance says that Google doesn’t even need to connect to an insurer to get their product information.
“Everything is filed exhaustively on the personal lines side” with regulators and states, Brown notes. However, he adds, Google can learn even more about the insurance shopper and what kind of products they want to buy online. “The only thing worse would be Amazon selling [insurance,]” he says.
Google has engaged Bolt Solutions, a vendor of software that enables direct sales of insurance, as a preferred vendor of software that connects insurance companies to the search engine. The platform handles accounting and monitoring for companies that choose to partner with the aggregator pretty standard stuff, according to CEO Eric Gewirtzman.
Bolt did not answer a follow-up question about what kind of data specifically passes between Google and the insurer through its platform by press time. Google also declined comment for this story.
Bolt sees the opportunity to expand markets in the Google launch on the side of the carrier, not the search engine, Gewirtzman says. “Google controls a huge amount of traffic, and they focus on making it easy for the consumer,” he explains. The new site is “a response to what consumers are demanding, and our role here is to help carriers capitalize on it,” he continues.
Initially, that wasn’t enough to lure the biggest auto carriers in the country, some of which have long-established partnerships with aggregators. In the company’s fourth-quarter earnings call held just one day before the Google launch Progressive CEO Glenn Renwick asserted that “We concentrate a lot on our own brand and bringing people directly to us rather than intermediation that may or may not be value added,” even though “it’s no great surprise that Google has interest in things in where they could clearly consult with us.”
But it’s not credible that Google was only an agency-link away from becoming an insurance behemoth, says industry consultant and former Aflac CIO Michael Boyle. If Google really wants to compete in the insurance arena, it needs to find and develop insurance talent, even if the plan is to build a company that can insure self-driving cars.
“They fundamentally don't understand insurance, and out of necessity they may need to co-create [a product] with somebody -- probably one of the partners they are working with now -- to help them cover the Google car when it comes to market,” Boyle says. “A traditional aggregator understands the marketplace, Google does not -- and after all of the money they spent on Google Glass this could become another black hole that they throw money into if they do not bring the required expertise to Mountain View.”
In fact, insurers have an opportunity to lead the way in developing new kinds of products that meet the standards Google and other technology innovators are driving, Brown says. If an insurer wants to come up with a great product to insure self-driving cars or ride-sharing programs especially one that uses mobile or Internet of Things technologies -- Google might end up being the idea distributor for that product.
“People are willing to take a chance on newer technologies in the insurance industry, and I don’t think they’re going to hurt from getting partners,” he says. “Google is such a major force and [insurers] are really going to look at is the distribution opportunity.”