As Google’s entry into the U.S. auto insurance industry drew closer, predictions for what exactly would emerge varied wildly. Some even feared an all-new Google insurance company that threatened to use its superior data and analytics resources to overwhelm insurers.
What did emerge, however, was the Google Compare auto insurance aggregator — currently only available in California, but built on the successful model the company has run in the U.K. for several years. Now, carriers look to Google as a partner — at least in the short term — and appreciate the brand’s reach and ease-of-use as a weapon in the customer-acquisition war raging in an increasingly commoditized and competitive sector.
Insurers have strived to keep pace with consumer technologies and ever more-sophisticated expectations around the customer experience. And now companies like USAA, one of the largest P&C carriers in the United States, as well as other prominent companies like MetLife Auto & Home and Mercury Insurance, are banding together with Google Compare and other insurance aggregation sites to offer consumers a new way to shop for and purchase auto insurance.
Google Compare works the same way as other insurance aggregators who have operated in the U.S. for several years. These sites provide quotes from partner companies (Google has about a dozen) after customers fill out an online form. The ease with which users can get multiple quotes means the space is “certainly a disruptor,” says USAA’s Jon-Michael Kowall, AVP for P&C innovation.
“It allows the everyday person to get a more apples-to-apples, simplified comparison and to make the best decision for them,” he explains.
Though Kowall says USAA worked directly with Google on managing customer touchpoints as it joined the Compare platform, technology companies, such as Bolt Solutions and Insurance Technologies Corp., and agencies, such as CoverHound.com, Compare.com, and others, are also part of this changing ecosystem. That’s because integrating existing distribution strategies — especially agent forces — with the emerging aggregator channel is a big project for IT departments.
THE DIRECT IMPERATIVE
According to “Agents of the Future: The Evolution of Property and Casualty Insurance Distribution,” a white paper by management consultancy McKinsey & Co., auto insurance is becoming a commodity product with thinning margins, fueling the growth of direct-to-consumer models as insurers struggle to lower costs. And there are many benefits of insurers having closer and more direct relationships with customers, such as new opportunities to build brand loyalty, as well as cross- and up-selling opportunities driven by consumer data.
USAA’s strategy is to serve members and policies in whatever channels customers prefer, Kowall says. “If they want to call us, mail, e-mail, use a home computer or mobile device, our strategy is to be the best in all of those. But there’s no doubt there are new emerging channels, like Google Compare,” he says. “This is an incredible way for us to reach out to those people and fulfill our mission, which is to facilitate their financial security and be the best that we can for them.”
Though insurance agents lost 7 percent of their market share to direct carriers from 2003 to 2013, according to McKinsey, disintermediating agents isn’t Google’s objective, says Nicolas Weng Kan, CEO of Google Compare. In the UK, he notes, more than half of the sales initiated on Google Compare are closed by a live person, either in an insurers’ call center or with one of their agents.
“There is a level of complexity and a level of comfort that customers need before they make the commitment to buy the policy. If you are within a certain price range, and you have a big brand, the conversion will be stronger,” Weng Kan says.
Insurers are quick to reassure agents that their responsibilities within the insurance ecosystem will change, not disappear, as insurers interact directly and more frequently with consumers.
“The lifeblood of Mercury’s business has and always will be our partnership with independent agents,” says Erik Thompson, advertising director at Mercury. However, he adds, “partnering with Google Compare provides us with a tremendous opportunity to connect with a segment of the market that would have been out of reach.”
From USAA’s perspective, Google Compare and other emerging channels are almost always worth some amount of testing and piloting, Kowall says. It’s the only way to find out what really resonates with policyholders.
“We will step back and look at the results,” he says. “Did members and prospective members find the experience valuable? Did it give us the things that we are hoping to achieve with a viable channel? If so, we’ll invest resources; otherwise, we won’t.”
The primary technical challenge for agencies and insurers wanting to participate in Google Compare has been latency, or the time it takes for the comparative-quote engines to return quotes to the end users, Weng Kan says. “When a customer comes, they want to see prices very quickly. When you’re in an agency and you’re talking to the consumer, 30 seconds is perfectly acceptable; when you’re at home and waiting to see prices, 30 seconds can start to be a challenge,” he adds.
To address that issue, Google Compare has partnered with Insurance Technologies Corp. (ITC) to create ITC’s Rating API for TurboRater, its comparative rating system. And, Weng Kan says, Google Compare is willing to do custom work to facilitate integrations. “Not every carrier is ready for this type of integration, so we have to do some custom work to adapt our model to the needs of our customers, which we’ll gladly do.”
In fact, to meet that challenge, Google and Bolt Solutions launched Bolt Google Connect, which is intended to help insurers minimize the cost and risks associated with participating in Compare. The software, which Bolt calls an “on-ramp to the Google Compare platform,” includes a technical firewall to preserve confidentiality and customer ownership, data capture and access for business analysis, and an optional bridge to the insurer’s system for auto bind and issue.
“Part of what we’re trying to do is keep a level playing field and allow brands to compete on their value and on their ability to price correctly,” Weng Kan says.
In addition, he says, the model enables insurers to control the customer experience more directly, from sales to claims. “They could establish closer relationships and interact with those customers more frequently and on different topics rather than going through the agent. This is really one of the key benefits of a price comparison proposition, as it exists now,” he says.
To make quotes as accurate as possible, Google Compare offers a heavy load of questions, Weng Kan says, and the answers remain available to insurers for further analysis. “You might use 40 of the answers out of 48 questions. But if you want to come back in six months or a year’s time and say, ‘What did this customer answer on this particular question?’ We’ll have it available.”
DISRUPTING ONLINE DISTRIBUTION
Many agencies, especially online players like CoverHound.com, are partnering with aggregators such as Google Compare to get into the online competitive-quote generators and increase their access to online shoppers, accelerate their sales processes and reduce costs.
On the CoverHound site, users answer questions, can compare four carriers’ quotes at a time, then purchase the coverage either on the CoverHound site or via a five- to 10-minute phone call with a CoverHound agent, explains Keith Moore, CoverHound CEO: “With us, you can pick auto, you can pick home — they can be two different carriers — and you can transact once, with and though us. That’s what’s important about it.”
The difference between an online agency, like CoverHound and an aggregator, like Google Compare, is that users complete the transactions via CoverHound.com, or through an agent in the CoverHound call center, Moore says. Google only relays a price.
Getting the customer in the virtual door is where sales are closed, Moore says, noting that the initial rates shown to customers via aggregator may be estimated or simply inaccurate. Google, however, doesn’t allow companies to display prices that aren’t fully vetted. So, CoverHound accesses a combination of third-party data sources, including LexisNexis and Transunion for credit scores and other personal data, with the goal of presenting an accurate first-and-final rate.
Moore expects big changes in the ways insurance, and auto insurance especially, is distributed. “You’re going to have Google Compare continue to roll out new states. And you’re going to have other players. We’ve seen Wal-Mart get into the space [through a partnership with the aggregator Autoinsurance.com] and there are other big players that are talking about doing the same that have a very broad footprint in the shopping and fulfillment side of the Internet.”
IDENTIFYING CHANNEL PREFERENCE
CoverHound is seeing policies sold through Google Compare grow “week-over-week since the March launch,” according to Moore. He attributes that fact to the customer experience, which is as guided as possible over the web.
“There’s still a lot of hand-holding that has to happen during the insurance shopping processes,” he explains. “Most consumers still need a trusted advisor to give them an experience that’s optimized.”
Overall, Kowall concludes, USAA wants to be on the vanguard of technological innovation in the insurance industry because it’s a matter of fulfilling the insurer’s mission. Working with Google on refining the customer interaction through the online aggregator model will help USAA find the best ways to protect the financial security of its membership.
“We want to be a part of these new emerging channels and technologies to make it easier to do things and make decisions,” he says. “We have to be the best, and if not, we create partnerships with the best players in the industry.”
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