Google Compare launches car insurance

Google Compare has existed in several forms during its evolution.  It began as an outgrowth of the Knowledge Graph to provide quick answer to common questions.  For example, if you type “12 feet in meters” or “70 Fahrenheit to Celsius”, you get an immediate answer before the search results.  Google has experimented with extending this functionality to other comparisons, such as the nutritional value of two foods.  But as Google continues to expand this program into other topics for comparison, it’s also looking to monetize the product via Google Flights, Google Hotel Finder, and Google Credit Card Compare.  

Now Google has begun testing a new sponsored comparison: auto insurance. Google Compare for US Car Insurance has launched in California, and searchers can quickly and easily review rates, benefits, insurance company ratings and reviews, and more information.

Google’s ability to provide these types of answers in an easy to compare format hinges upon accurate data—and so for industries like credit cards, travel, and insurance, Google has built out a system for brands to provide timely, detailed, accurate data—but in order for Google to include this data, they have to pay.  Google Compare operates on a Cost per Acquisition (CPA) model, but unlike other Google advertising platforms (like AdWords) paying the cost only ensures you’ll appear in the comparisons—payment isn’t a factor in ranking.

Google is positioning Google Compare as a connector between consumers, agents, and carriers—not as a competitor or barrier to entry.

One key thing to keep in mind is that Google Compare isn’t just focused on price—numerous factors such as specific insurance needs (including SR-22 certificates of insurance required by some in order to legally drive) as well as general demographics that affect insurance coverage come into play.  Google’s focused on providing as much information to the consumer as possible, so insurance companies that aren’t focused on driving the absolute lowest rates will still see value.  Several providers, including The General Insurance, 21st Century Insurance, Infinity, Kemper Speciality, Titan Insurance, and others, are testing Google Compare in California. While this product is only live in California so far, Google Compare Auto Insurance Services is cleared to sell insurance in 26 states, although the number of insurers that Google can sell policies for varies on a state by state basis.

The move to offer insurance comparisons to web searchers could help Google generate additional revenue through commissions, but several of the major insurance carriers in the U.S. have been declining to work with Google on this new effort. Reportedly, Progressive, State Farm, GEICO, and Allstate, among others, eschewed joining the program, to date.

Based off what Google built in the U.K., carriers see the comparison offering services as a price-only appraisal, and many don’t want to be compared by price alone. It remains a challenge for U.K. insurers and distributors to make a profit; some have left the auto insurance market altogether. If the California test-market results fare well for Google,  we anticipate similar marker-based disruptions to follow in the U.S.

There is little room for operational error in the U.S. auto insurance market. Insurance agencies must manage a fine line between claims, revenue and costs. Mobile-only apps with Twitter-based claim processes could provide a measure of dexterity for early adopters. Those insurance agencies that can leverage scale will be better positioned  to realign digital resources and seize the upper hand, as size continues to provide competitive advantages in certain aspects of the value chain.

Much like the travel industry, aggregator channels will be the first to feel the pinch from Google Compare for Auto Insurance. Now is the time to realign paid and organic search assets with highly mobile social media initiatives. As margins for auto insurance narrow, market pressures will potentially increase costs associated with paid positions for top visibility on bundled insurance services, as well as home, life, renters and other types of specialized insurance offerings.

We believe the rapid changes in the auto insurance industry are far from over. Patterns of distribution will continue to shift. Insurance agencies will have to further adapt their business models as and the auto insurance continues to evolve toward a highly digitized experience. Those that can innovate faster will minimize the potentially disruptive forces of Google Compare for auto insurance.