Well, the word is out: Google Compare is shutting down operations by the end of March. Begun in 2011 as a full financial services platform for banking, investing and credit transactions, Google announced the addition of insurance quoting in mid-2015. Now, not even a year into it, the search giant is shutting it all down.
So, what went wrong? Google seemed to hold several core beliefs, commonly held by “outsiders,” about our business that were simply incorrect. In a nutshell, Google appeared to believe that the insurance business is not competitive; all personal lines auto insurance is a commodity; and its own business and platform success can be imposed on — and replicated in — any sector.
Google seemed to think that they need only announce their interest to operate in the business of insurance, and carriers and consumers would come flocking. In announcing the wind-down, their representative acknowledged that the current operations had not met expectations. That is PR spin for “we failed.”
Everyone forgets that while most carriers do not have or participate in carrier-controlled comparative raters, almost all independent insurance agencies and broker firms do, and they use these services regularly. The insurance agencies that are moving forward into this next invention of our business are tech-savvy, know and meet their prospects and customers with e-skills and tools.
Google’s spokesperson also observed that the insurance business is more complex than most people would assume. Google forgot that their success, also the basis for their business experience and expertise, is in mercantile. That is, a point-click-to-shopping-cart-checkout kind of business, where each transaction is really done once completed.
There is a common pattern to personal lines auto insurance in the nature of risk being insured, coverage types offered and the policyholder obligations that are transferred to us through the policy, and creating a customer relationship. However, never underestimate the high percentage of exceptions this industry makes every day across thousands of transactions, because it is necessary for those policyholders. Independent insurance agencies can demonstrate that fundamental rule. Ignoring the details and many differences in this business, even in personal lines auto, is cruising for an Errors and Omissions bruising.
Some say Google is just shutting down to retool and be better. However, that’s not clear. Google just learned a very expensive lesson: This is a very competitive industry. Google didn’t seem to know that, or how to compete. The trade purpose and customary operations of insurance are entirely different than that of mercantile.
This also has important lessons and reminders for insurance people: This business is highly competitive, highly detailed, exceptions-oriented, and legal-obligations heavy. Also, never underestimate the importance and power of local agencies serving local people, even as millennials grow into their adult place in our insurance economy. Overlooking these fundamentals can spell disaster.
Insurers and Main Street independent insurance agencies and broker firms recognize, accept and are finding their way through the upgrades to new technologies and how best to deploy them for the success of their businesses.
Google discovered what independent insurance agents have always known: When it comes to insurance, customers appreciate that it is a complex transaction that requires professional advice.
There may be a temptation on the part of some independent insurance agents to conclude that Google’s decision to pull the plug on Google Compare means that local agents have “won the battle.” In reality, agents have merely won a skirmish. More competitors are out there.
Patricia A. Borowski is senior vice president of the Alexandria, Va.-based National Association of Professional Insurance Agents.