Google Compare Fails at Initial Attempt to Break into Auto Industry

by on Mar 01, 2016

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Google announced that it suspended its Google Compare service, all but admitting defeat in its efforts to enter the auto insurance market. Google has seemingly succeeded at everything it has done, but its attempt to enter the auto insurance market has failed (for the moment) due to the firm neglecting the importance of independent agents and its lack of nationwide coverage.

The company officially entered the U.S. auto insurance market with great confidence in March of 2015, and it wasn’t the only one to believe it would dominate the marketplace. William R. Berkley – CEO of W.R. Berkley Corp. – told an audience of independent insurance agents in response to Google Compare: “I’m here to tell you that you’re screwed,” comparing Google’s entrance into the market to when GEICO began selling insurance coverage online and how that diminished independent agents’ roles.

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Berkley severely undervalued how much customers favor the personal touch of independent agents, as Google’s failure can be partially attributed to clients’ preference for personal agents versus the impersonal nature of Google Compare. Google counted on its brand to attract customers, thinking customers would go to Google first as they would for so many other things. Laird Rixford, president of Insurance Technologies Corp., believes the company was overconfident in this endeavor: “Just being Google does not predicate success.” In recent months many firms have ramped up their efforts to promote the value of independent agents – such as Safeco’s devoted section on its public site – and these efforts seem to be working.

safecos_new_independent_agents_section.pngSafeco’s New Independent Agents Section

Another major problem is that Google was unprepared for the complicated nature of selling insurance versus other products. Selling auto insurance requires state-by-state approval from regulators, so Google could not release the product nationwide. Google Compare was included in the October P&C Insurance Monitor Report where the service was complimented for its ambitions but also called out for its limited state and carrier availability.

Still, Google insists it is not giving up on Google Compare. CEO and president of CoverHound – one of Google’s initial partners – says that the firm just plans to “go dark” until it can improve the customer experience to the point where it is successful. Comparison shopping is built to provide the best customer experience by giving customers as many options as possible, yet Google Compare is a testament to how much work goes into creating a positive customer experience without independent agents on the ground.

Google Compare is not dead, but it is fair to say that it has been a great disappointment. If Google wants to revive its project, it is clear it must fully embrace and understand the different aspects of the auto insurance industry, or else it will continue to fall short of expectations.