Huffing and Puffing

Is the big bad wolf coming? Perhaps yes; perhaps no.

All the talk of Google entering/possibly entering the insurance market – depending on one’s locale – has created quite a stir.

“Google is getting the approval for selling insurance on their compare site in a large number of states via a number of different insurance partners,” Denise Garth, a partner with Strategy Meets Action (SMA), writes in a recent blog.

A survey from Accenture, issued a year ago, showed that 67% of polled insurance customers would consider purchasing insurance

products from organizations other than insurers. The survey attracted responses from 6,000-plus customers in 11 countries, and multiple responses could be given.

In all, 43% of respondents reported they would consider buying insurance from banks, 23% from online service providers like Google or Amazon, 20% from home service providers such as telecommunications or home security companies, 14% from retailers and 12% from car dealers.

“Competition in the insurance industry could quickly intensify as consumers become open to buying insurance not only from traditional competitors, such as banks, but also from Internet giants,” said Michael Lyman, global managing director for management consulting within Accenture’s insurance industry practice.

Garth notes in her blog that “companies like Google would not underwrite the risk, but they would be the primary point of contact for the customer relationship, making insurers the providers of the insurance product within Google’s ecosystem.”

Insurance comparison shopping site Google Compare rolled out in the United Kingdom in 2012.

It allows vehicle owners to compare a range of insurance policies from various providers to which Google has access and that may be available to those consumers. It does not provide advice or endorse specific products or providers.

That is good news for insurers… if that approach continues. Were it to change, though, it would not be so good for insurers (except, perhaps, those that receive endorsements) in light of Google’s considerable reach and dedicated audience.

Keefe Bruyette of Keefe Bruyette & Woods was recently quoted as saying it would be more impressive “in terms of industry impact if a tech company like Google were to deploy its analytical firepower at actually pricing (i.e., underwriting) auto insurance policies rather than simply acting as a comparative shopping tool.”

That not being the case (yet), insurers would be well-advised to rethink how they will do business in an environment where technology reigns supreme and ever-increasing customer demands will have the power to drive change in how products are configured and delivered.

Timely response, insight and having options available to suit customer needs will likely be critically important. And that will demand having in place systems that can serve customers the way in which they want to be served both now and in the future.

Many in the insurance industry have lagged other sectors with regard to investing in and beefing up technology and systems to make those objectives a reality.

Responsiveness will surely also be about product offerings and partnerships that help keep customers happy and on side.

Armed with data – and a willingness to invest and innovate – future competitors may take many forms. Those able to offer choice and lower costs will, at the very least, get a look from customers.

Recent survey results from Accenture – based on input from 141 insurers in 21 countries – shows 72% of polled insurers have formed or are planning to form new distribution partnerships.

Of those intending to do so, 69% are considering partnering with banks and 44% are considering tech companies like Google or Facebook.

Garth cautions that Google is not just some aggregator site. “It represents a major disruption by a recognized innovative giant who brings an outside-in approach to customer-driven engagement and empowerment.”