Google Dupes Insurance Buyers: Insurance Agent Executive

May 18, 2015 by

Independent insurance agents are accustomed to competition but many are watching with heightened interest the entry of one new competitor in particular, Google Compare.

Bill Wilson, director of the Virtual University at the Big “I” (Independent Insurance Agents & Brokers of America), contends most independent agents aren’t overly concerned about Google’s recent entry into insurance sales although they probably should be concerned to a degree.

Wilson believes consumers buying quickly online and captive agents selling for direct writer carriers should be the ones worrying about Google more so than independent agents.

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“I think most agents aren’t overly concerned because this isn’t anything new,” Wilson says. “What Google is doing has been done for at least 10 and maybe closer to 20 years now.”

Many comparison auto insurance sites have been launched during the past 10 years. They range from Progressive Direct, GEICO and Esurance to Nerd Wallet, Quote Wizard, Bank Rate and carinsurancecomparison.com.

The difference now is in the Google name, a name that comes with financial power, he and others have noted.

However, that name and financial prowess don’t mean it’s better than the others. Wilson says Google Compare is another in a line of auto insurance comparison websites that mislead consumers.

What worries Wilson the most is the risk consumers face buying their auto insurance from Google Compare and similar sites without the professional advice of an independent agent.

“The big loser in all this is not agents or insurers or anyone else, it’s consumers, because they’re being duped into believing that all of these policies and the service providers are exactly the same — that the only difference is price,” Wilson says.

While Google Compare currently only deals in comparing auto insurance products (although some expect Google Compare to expand), some other comparison sites also delve into homeowners insurance. A few boast about producing a homeowners quote in just two minutes, Wilson says.

“It just doesn’t make a lot of sense to me,” he says. “How can you really help a consumer identify their exposures to loss and match it with the right customized product for those exposures?” in two minutes?

There is another reason Wilson doesn’t think independent agents will be by outgunned by Google.

According to Wilson, auto insurance buyers who don’t care where they buy coverage as long as they get the cheapest price are not the type of consumer generally targeted by independent agencies.

“In fact, auto insurance only isn’t the market of the vast majority of our members,” he said. “These kind of people are gone if they can find something $50 cheaper elsewhere.”

Losing those customers to Google Compare or others doesn’t matter a great deal to most independent agents, Wilson said. He doesn’t even believe Google will have much effect on the independent agent market share — or at least he hopes that it won’t.

Rather, he expects the captive agency distribution channel to take the biggest hit.

“When you look at the market share report that we produce annually and go back, say, over the last 20 years, back to the early days of the Internet when some of these websites really first got started. The segment that has been affected the most by direct sales — both TV and Internet — is the captive agency channel. They’ve gone from something like almost 60 percent of the auto marketplace to just below 50 percent during that period of time.”

Independent agents have lost some market share, but in Wilson’s opinion, what’s been lost in auto market share were customers that independents just didn’t want. “They just let it go.”

Wilson admits that Google being Google will draw the attention of some consumers.

“Needless to say, since it’s the predominant search engine, depending on how Google markets Google Compare, if you’re searching for something that has the word ‘auto’ or ‘car’ in it, there on the search results, the Google Compare website may show up over and over again. It may drive traffic but I don’t know that it’ll drive additional people to that kind of marketing channel.”

Wilson says a large part of competing against Google Compare and other new industry players resides in education — delivering education on the value that independent agents bring to the insurance transaction — to consumers and even the industry.

“It is an educational process and it’s something I’m going to hopefully spend a lot of my time in the next year or longer on starting within our own industry and then moving to the media and ultimately to the consumers,” Wilson said. “We’re not selling CDs where it doesn’t really matter whether you buy it from Amazon or Best Buy or whatever.”

Insurance policies are complex legal contracts, he said, and that’s the first thing that the industry has to get people to understand.

One of the most important services that independent agents provide is claim advocacy.

“I spend a lot of my time, almost literally every day, helping agents who have consumers who have had a claim and either the claim has been denied or not completely covered and the agent feels that the denial is incorrect,” Wilson said. “That’s not something I think you’re going to get from an online vendor.”

Some of those now running comparison insurance shopping websites believe that Google’s entry could draw more attention to buying insurance online.

However, they also believe Google would face the same obstacles they have been dealing with in getting shoppers to move beyond getting a quote and actually complete the buying process online. They say the challenge in online selling is not about search, which is Google’s strength, but about closing the deal.

Online retailer Overstock.com began selling insurance online about a year ago. CEO Patrick Byrne told Insurance Journal that his e-tailer’s foray into insurance has not been as successful as hoped, at least not yet. But he said Google could be a boon to his business by introducing more people to online insurance buying.

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