Google has ended its up and down roller coaster ride called Google Compare. To some this may come as a relief, or a surprise. Google has such a broad range of revenue streams like Google Play, Google Apps, Google Cloud Platform, and Google Fiber, that Google Compare seemed to be a bit of an over-extension for this tech giant. However, if you think about Google going into the insurance comparison industry, it makes total sense. According to Conor Dougherty, who writes for the New York Times, "The key to insurance is having lots of data about people’s backgrounds and habits, which is perhaps the company’s greatest strength." This information is vital to quoting realistic insurance prices, which would give Google a great advantage in the online comparison insurance space.
Google Compare was designed as a lead generation program, that was looking to be the "Kayak" of auto insurance, something that consumers have been asking for. Google Compare for the most part was used by customers as a tool to reference prices. Some even looked up prices upon the renewal of their insurance and then offered up the information to their current agent, to see if they could get a price match.
Online comparison sites are taking the place of intermediaries, who have for a long time been the cornerstone of insurance trading. Ellen Carney, from Forrester Research suggests that, “There are 40,000 agencies in the U.S., and you could absolutely imagine them shrinking by a quarter, and the ones that are left will deal with more complicated needs and more affluent customers”. If the number of insurance agencies are shrinking, those who are left need to be able to handle the larger volume of well-informed and complex customers.
So, why the flop?
Around two months ago Google and Compare.com, separated. Compare.com was one of Google's largest partners in its Google Compare endeavor. However, Compare.com focuses on offering customers options to purchase insurance through call centers, agents, and online. Google Compare focused on customers buying from its carrier partners. It has also been speculated that Google will make more money selling AdWords to insurers than the comparison business.
Google was having trouble meeting volume and revenue projections for its Google Compare site. Prolonged waiting time for entering into other states, and meeting regulation requirements, also contributed to Google Compare's shut-down. Another issue was getting customers to move beyond a quote and to actually purchase insurance online.
Impact on the Insurance Comparison Market
Some competitors feared disruption and loss in sales when Google first announced its online comparison platform. This widespread fear, in retrospect, seems to be an overreaction. However, as more online price comparison tools enter the market, it is becoming harder for new platforms to establish themselves and create a competitive advantage. The online insurance shopping market seems to be vast, but as the increase in companies entering into the market grows, so does the competition to keep customers and to turn quotes and visits into actual sales.
Is this part of a move to get out of insurance? Or is shutting down Compare just step one in something bigger?
Only time will tell if Google plans to get back into the insurance market. Personally, I think that this is a move not to get out of insurance, but to get back in the right way. Google has been known to discontinue unsuccessful products before, such as, Google Glass. Google has such a large advantage in analytics and data, which is important to have when getting into the insurance business, that it would only make sense to enter the market again in the future. They will probably pursue a different platform and it might not be auto-insurance, but I do expect Google to get back into the insurance market once the maco-factors influencing regulation and the industry settle down.