I was taken aback by the news that Google was curtailing its investment activities in Google Compare, a comparison shopping site for auto insurance in the US and other financial products in the UK. When launched with much fanfare less than a year earlier, the industry was abuzz with disruption prophecies and premature predictions of agent demise. Perhaps the rapidity with which Google pulled the plug has me most puzzled, as their approach to the problem seemed measured and logical from the outset- tackle one form of insurance that is more often bought than sold (auto), focus on one state initially (California) and deliver a state-of-the-art user experience that would drive purchasing power to the consumer, and ultimately market share to the participating carriers.
SO WHAT DOES GOOGLE’S EXIT MEAN FOR THE INDUSTRY?
My colleagues on the Andesa Services management team were discussing this development. Here are some perspectives to consider:
1) Size matters (or does it?): The insurance industry is sizable and attracts investments by sizable and recognizable entrants– Google, Walmart, Overstock.com as emerging marketing players, Guggenheim and Harbinger Group as risk and finance players. While the names alone can strike disruption fear in the hearts of traditional or smaller insurance carriers and agents, size alone may not be the deciding factor. Even though Google is a massive corporation, its efforts were limited in scale; an experiment, a learning laboratory. Disruption and innovation often come from small beginnings. This means it is entirely possible for such changes to come from within the industry if leadership embraces change and acts to explore improvements in products and processes. Those who fail to take initiative are falling behind.
2) Don’t rest on your laurels: Google has not exited the insurance industry. Google is licensed to sell insurance in 49 states. Given the significant commitment to become licensed in those states, there is little doubt Google still has insurance in its long-term strategic sights. Google Compare was entry-level research, not a failure. Perhaps Google realized it could make more money selling advertisements and click-through optimization rather than commissions on insurance. Perhaps it foresees its investment in driverless technology truly disrupting the market and outpacing any return on investment in aggregation portals. Whatever the reason, Google will learn from this experience. Even companies that are industry leaders cannot rest on their laurels. Google is still out there, as well as other innovators with great ideas. Yesterday’s models will not necessarily equate to tomorrow’s successes. Keep innovating.
3) Complexity does not provide a barrier to disruption (or competition): Veterans of the insurance industry recognize the complexity of risk management and insurance products. The insurance industry may look easy from afar, but with multiple product offerings, a state-by-state regulatory environment, the actuarial prognostications required and certain contractual promises which can span multiple generations, it quickly becomes obvious – insurance is a complex business. However, complexity in and of itself does not guarantee things remain status quo. Complexity may slow the pace of disruption, but eventually market disruption will occur by those who build a better process, create a better service model or, more importantly, simplify. Technology still provides a significant opportunity to disrupt. It is imperative that industry leaders remain committed to the investment necessary to develop better methods and models to remain relevant.
4) Customer experience is not just a technology issue: Speaking from experience, the buying and selling of insurance is not necessarily a process for which I need or desire human intervention. It is more convenient for me to be able to do the research, obtain a quote and make a premium payment online for my more straight-forward insurance needs. Most of this I can do without an agent due to better technology. However, my agent serves a valuable service when I need more detailed insurance expertise, am engaged in a complex insurance situation, need planning advise or when a claim needs to be processed. So, for me, the agent plays a valuable and personal role in the customer experience. However, agents also cannot rest on their laurels. The sales process is more than a relationship. Agents need to embrace technology and yet demonstrate their value-add to be successful in the long-term.
Some in the industry may have breathed a sigh of relief with the Google announcement. Nevertheless, the issues noted above are real and are not going away. If we fail to innovate, create better and simpler service models, make the necessary investments and prove our value-add, we can expect others to step into the void. We will become an industry driven only by technology, selling commoditized products, with no recognition of the valuable service we provide. Instead, I hope the Google experience will serve as a wake-up call that prompts us all to re-think our products, services and processes.
I’d love to hear your thoughts and reactions to Google’s announcement.