Tag Archives: insurance innovation

It’s Time for Next Phase of Innovation

The insurance industry has slowly embraced digital and mobile technology (strong emphasis on slowly) over the past 10 years. It’s time to break through the first phase of technology adoption and move into a new phase of tech-enabled innovation.

The early phase of technology adoption usually sees incumbent businesses apply technology to existing products and modes of thinking. So, with the first wave of digital adoption in health insurance, we saw plans launch member portals and mobile apps where users could view their explanation of benefits and chat with customer service representatives online. However, nothing about the underlying insurance plan changed.

When it comes to plan design, insurance companies too often think within existing platform limitations. They most often ask: “What can we design that will work on our existing platform?” Then they design the plan and move on to implementation. This is invariably the sequence when developing insurance products and bringing them to market.

The process makes sense at first, because the development of new platforms takes time and costs a lot of money. But these platform limitations are holding us back from designing new tech-enabled insurance products that can truly change the market and better serve customers.

Tech-Enabled Insurance Innovation Will Guide the Future

Starting from scratch is a startup’s advantage, which incumbent insurance companies don’t have.

Oscar Health Insurance is a great example of a startup making heavy investments in new technology and innovative plan designs to create a better member experience. Its telemedicine service and digital provider directories aim to improve access to free or low-cost care for members with high deductibles.

Major medical health insurance is far more regulated in its plan designs than other forms of insurance. If you could start another ancillary insurance product from scratch, however, what kind of plans would you design? If you follow the old way of thinking, you will design the plan first and then think about how to platform it next.

Granted, there are some advantages to this approach. You can create a better version of existing products, like, for example, critical illness insurance policies. Another advantage to tweaking a known insurance product is that you can often rent an existing technology platform to get to market quickly. But if you do that, you risk designing a product that’s not differentiated enough from existing solutions to entice employers and brokers to switch. You also miss an opportunity to create a better solution for your members that actually improves their health.

When we started Brella, for example, we knew we wanted to make a real difference in the health and financial wellness of our members. We saw that as the only reason to go through the trouble of developing a new insurance product — but we needed to build everything from scratch.

See also: Crisis Invigorates Insurance Innovation

The next phase of insurance product innovation is tech-enabled thinking. When you design a new insurance product, think of it in the context of its tech platform. That means you must have both insurance experts and technologists at the table. This is really powerful; it is what enabled us to come up with the concept of a supplemental health insurance plan that pays benefits on diagnosis.

An example of this is Beam Dental’s dental coverage insurance, which uses a connected toothbrush to reward groups with good brushing habits with rates better aligned to their lower-risk profile. Eden Health is also making strides with its primary care solutions that weave together healthcare navigation services with direct primary care. Its tech platform was nimble enough to quickly help employer customers with COVID-19 screening and testing to keep their teams healthy and working through the coronavirus pandemic.

At Brella, we learned from our customer research that out-of-pocket costs caused by rising health plan cost-sharing are a major pain point for families. Existing supplemental plans were not designed to cover that gap. In addition, those plans were rarely used, and, when they were, customers were far from satisfied with their claims experience and the complex rules associated with the plans.

As we thought about building a supplemental insurance plan to address this need, we asked ourselves: “What does a plan design that pays benefits on diagnosis allow technology to do?” and “What does technology allow us to do with the plan design?”

Our tech-enabled plan design lets us pay benefits sooner because the diagnosis happens early in the care journey. This approach also dramatically simplifies the claims and adjudications processes, so it’s easy for customers to file claims in minutes online and through our mobile app. What’s more, it opens opportunities for automation that didn’t exist in past supplemental insurance plans — which were stuck in the first phase of technology adoption.

These are the kinds of differentiated benefits that help customers and their families. That kind of value is worth the price of change for employers to embrace innovative insurance solutions.

Essentially, tech-enabled insurance plan design asks: “What can you do with the plan that unlocks new technical capabilities?” and “What can you do with technology that makes new plan features possible?”

In the next phase of insurtech innovation, more partnerships between insurance experts and technologists are necessary. We need more tables surrounded by actuaries and engineers to create solutions that will realize the world we all want — one where health hardships don’t become financial burdens.

Crisis Invigorates Insurance Innovation

It’s like a scene from an action-packed Marvel thriller! The threatened hero is being chased down the street but sees a route for escape. It’s an alley. (We all know not to go down the alley, but the hero doesn’t listen to us.) At the end of the alley, there is a brick wall. (We all knew there would be a wall or a fence or an iron gate.) There’s no way around the wall. Our hero is going to have to get innovative in a hurry, find and use their superhero capabilities! They save the day. Save people. Save the world.

That’s what COVID has done to nearly every industry. It chased companies into corners. It threatened their markets. It even built brick walls in perfectly good alleyways, separating unprepared companies from the customers they need.

Sometimes, however, it is the crisis that makes the necessity become real. Think about it. The pandemic has obliterated any lingering doubts about the necessity of insurance digital transformation. With rare exceptions, operating digitally is the only way to do and to stay in business. It’s “go digital” or stare at that wall until the unthinkable happens. 

And this is where superhero capabilities come into play for insurers!

Some insurers are leveraging their superhero capabilities. They are the Leaders. When COVID rewarded the insurance industry with the ultimate teachable moment, they took the lesson to heart. When something built a brick wall between them and their customers, they made the wall irrelevant. They are focused on today’s business while also creating tomorrow’s business – operating at speed with a multi-focus, unlike others.

Some insurers are trying to keep pace or catch up. These are the Followers. Determined not to let the Leaders get too far ahead, Followers are listening to the lessons of COVID and are launching initiatives and making changes to ensure their success. They are solidly focused on modernizing and optimizing today’s business; however, they are less focused on creating the future business. But they are continuing to gradually fall behind.

Some insurers are in a tight spot. They face dilemmas. These are the Laggards. Laggards generally understand the market dynamics but are clearly stuck in the past and have failed to rapidly move to planning and execution across the array of strategic areas – even for their business today. They are not moving to new cloud platform solutions or incorporating platform and emerging technologies. They are keeping their business focused on the past, rather than the future. If not already in one, they are approaching a downward spiral of relevance that will be nearly impossible to reverse.

Majesco’s 2021 Strategic Priorities first report, based on post-COVID insurer survey results, shows a dramatically widening gap between Leaders and Laggards – 64%, a year-over-year increase of 20% – when looking at their focus on key strategic initiatives in the past year. Followers were “treading water” to keep even with the previous year – with a 12% gap to Leaders.

To explore in more detail the widening gaps, the 2021 Strategic Priorities second report, just published, assesses how insurers are dealing with necessary transformation in the midst of increasing challenges. In today’s blog, we look at the details of this gap. What is it that Leaders and Followers and Laggards are doing differently? What can insurers do to make sure they are positioned to become or remain Leaders?

See also: Does Remote Work Halt Innovation?

Despite COVID Challenges, Leaders Are Widening the Gaps

The COVID crisis seemed to come out of nowhere, blindsiding the world with the force of a tsunami. Suddenly, the “usual” way of doing things no longer worked. Adaptability is the new innovator. For example, COVID-19 reduced or eliminated “in person” time for agents, adding a layer of difficulty to distribution. Those who were prepared to digitally shift for everything from communications to support lead generation through alternate channels and launch products in spite of quarantines were in a better position to turn plans into actions.

What Did Leaders Do Differently?

A key to reducing the drastic impact is the ability to rapidly adapt planning – both the plans themselves and the process for creating and altering them. Throughout history, we often see that the difference between success and failure is related directly to the ability to evaluate, reinvent and adapt to the current environment. While COVID forced all companies to adapt, Leaders took advantage of the situation. Leaders exercised their adaptability to a much greater degree than Followers (25% gap) or Laggards (34% gap), as seen in Figure 1. 

Figure 1: Impact of COVID-19 on annual planning

Leaders are also more in touch with COVID’s potential internal and external impacts on their companies. Externally, their awareness of the impact to their customers was 26% higher than Followers and 33% higher than Laggards (Figure 2), a crucial insight and strategic difference between Leaders and those trailing them.

Leaders know they can’t assume the customers they serve today will need or want the same products and services tomorrow… or that the same customers will even be there tomorrow. Leaders constantly monitor the changing demographics and dynamics and make short- and long-term adjustments to adapt and thrive in an ever-evolving market. If their current target markets are diminished by COVID, they know they need to adjust their product and service offerings, develop new channels, seek new markets and more.

The State of Insurers Last Year

COVID was a gut punch for all three segments in 2020. Leaders, Followers and Laggards all had setbacks in their companies’ growth and strategic activities compared with 2019. On an aggregate basis, Leaders (-12%) and Followers (-10%) saw similar declines, but Laggards’ (-24%) was twice the decline of Leaders, highlighting their lack of preparedness for the crisis (Figure 2). In contrast, Leaders’ response was to counterpunch and adapt with new approaches to planning underpinned by a greater awareness of the business implications.   

Awareness and adaptability matter when responding to change.

Figure 2: COVID-19’s impact on growth and strategic activities last year

Despite the setbacks of the last year, Leaders continue to dominate with a 12% lead over Followers and a striking 64% lead over Laggards, as seen in Figure 3. 

Leaders and Followers were nearly identical in their views of company growth during the previous year, but Leaders averaged a 15% gap over Followers on all the other factors. The largest gap (21%) was in Maintaining/Replacing core systems, and the smallest (12%) was in a new factor added this year: Allocating resources to business as usual/change how we do business. 

Figure 3: Gaps between Leaders, Followers and Laggards in assessments of company growth and strategic activities last year

Digital Disparity

However, the huge gap between Leaders and Laggards was due to four key factors reflected in Figure 3 — all of which are linked to digital transformation and creating the business for the future:

  • Channel expansion: 103%
  • New business models: 97%
  • New products/services: 74%
  • Reallocating resources: 70%

These gaps reflect a vastly different strategic mindset between Leaders and Laggards, one that is squarely focused on the future and adapting to market challenges while the other is stuck in the past, trying to survive but falling further behind. 

The gap between Leaders and Laggards this year is the largest we have ever seen, more than doubling in size since we started tracking these segments in 2018-19. In contrast, the gaps between Leaders and Followers have been steady or slowly shrinking when looking at these in terms of the last year. But that gap is deceiving because it portends challenges when looking out three years. The gap between Laggards and both Leaders and Followers reflects a stark reality that Laggards’ lack of awareness, planning and execution are putting their survival and relevance at increasingly greater risk – something they understand the implications of well. 

This scenario aligns with a December 2018 Boston Consulting Group (BCG) article on how some companies successfully navigated disruption and created value, earning the title, “thrivers.” The article states that successful reinvention requires making a large bet—one that can overcome the drag of the old way of doing things. Making that big bet requires leadership, confidence and expertise to eliminate the “knowing – doing” gap. Those who wait – the Laggards – will need to make bigger and potentially riskier bets to gain parity with the “early responders” (the Leaders). As Leaders gain growth momentum, the “knowing – doing” gap grows, leaving Laggards with dwindling options and relevancy in fast-changing market. 

See also: COVID-19 Is NOT an Occupational Disease

The 2018 article seems prophetic in our current pandemic-dominated environment, as illustrated by this quote:

“In a time of technological revolution, shifting regulatory priorities, and fast-changing consumer expectations, most companies will face some form of disruption in their industries or core markets. Some management teams anticipate the coming changes and respond promptly. Others, slow to react, must eventually address a more mature threat. The speed of response matters. Early movers can experiment with new businesses and models. Those that wait have dwindling options and, as our new research shows, must make far larger, more concentrated bets to navigate the disruption.”

Speed matters, particularly during disruptive change.  

Has the COVID crisis invigorated your organization or has it backed your planning into a corner and trapped your transformation list under a pile of priority revisions? Are you using your superhero capabilities or continuing down the same path? 

Insurance Innovation — Alive and Kicking

Insurance innovation is alive and kicking, and gaining traction, as represented by the wide array of submissions for the 2020 Innovation in Insurance Awards, sponsored by Efma and Accenture. Last year, I was honored to be selected as a judge, and the winners were just announced in a virtual award ceremony.  Congrats to all for carrying the commitment to innovation for our industry!

With customer demographics and expectations changing, with new channels and competitors appearing and with so many technological possibilities opening up, we see a two-speed strategy around innovation: speed of operation and speed of innovation. 

Speed of operation focuses on optimizing the existing business model while speed of innovation looks at new business models that will disrupt the business. This two-speed strategy aligns well to AM Best’s innovation ratings.

Innovation That Stands Out

So, how are insurers innovating? In the submissions this year, there are leaders who understand the intersection of customer, technology and market boundary shifts and are blazing trails.

See also: COVID-19: Innovation, Your Time Has Come  

Here are six interesting trends and focus areas that stood out to me:

1. Personalized digital platforms

While a number of portal or mobile app submissions focused on niches such as bill payment, they did not provide the engagement offered by personalized digital solutions that delivered the kind of great experience customers increasingly expect. One submission offered services and rewards to clients with life insurance and monitored customer behaviors to provide personalized recommendations and rewards that would encourage healthy behavior. The result was a fully executed digital platform for behavior change.

2. Home and wearable IOT ideas

IoT and wearables have matured rapidly over the past five years. As I discussed last year, Insurance at the Intersections of Protection and Prevention, the real opportunity for these technologies was to create a bridge from P&C and home security into home health and wellness. P&C insurers (using IoT devices to protect the home) can use health awareness devices to serve those who choose to age-in-place – connected home and health all in one. With more than 10,000 Baby Boomers retiring each day, this is a huge market opportunity. One submission used smart technology to safeguard clients and their home while providing access to a range of services, including home repairs and maintenance, food delivery and medication reminders. The concept, a creative use of traditional P&C and life & health, epitomizes a customer-first approach, rather than a product approach. In today’s COVID-19 environment, and with the cost of nursing home care increasing, this option could appeal to a lot of customers.

3. Data ecosystem

Innovative uses of data are driving growth, and ecosystems can accelerate it. One submission built a data ecosystem with partners across a wide array of industries that allowed the entrant to visualize and use data for underwriting and helping clients minimize risks, thus increasing the company’s business. The opportunities to build on this concept are enormous.

4. Travel insurance’s customer experience

While buying travel insurance via an app seems commoditized, one submitting team changed the policy transaction into a broader customer experience, driving engagement, value and loyalty. Travelers receive recommendations on where to go, safety and security alerts (using geo-location from the mobile phone) and other services that improve the experience while reducing risk. This submission is a great example of thinking beyond the traditional risk policy to a broader customer relationship.

5. Family insurance

A number of years ago, the concept of a single insurance policy that would adapt as you went through life was discussed within a company where I worked. But the idea could not be done on the old mainframes prevalent back then. Fast forward, and the idea has morphed and emerged in one of the submissions. The entry looked at a single policy that would meet the needs of the family, including facets of home, accident, health and pet protection – all wrapped into a digital service that helps manage common, high-level family needs over the lifetime of the policy. This concept is radically different – approaching the need from the customer point of view, not from our long-held insurance point of view.

6. Agriculture

The last area that stood out is near and dear to my heart – agriculture. As an “Iowa farm girl,” I see the rapidly changing agriculture landscape and the use of technology to aid farmers from planting through harvest – well beyond just for potential risk and claims. There were three submissions that stood out to me. The first was a digital experience for farmers in India that focused on providing crop insurance but also included services such as cultivation recommendations that would help increase crop yields. The second was insurance that also provided intelligent traceability of agriculture products to minimize potential risks – all about secure sourcing and food safety. The third was parametric insurance for coffee growers. All of these highlighted how a centuries-old agriculture industry is ripe for new products and services to help optimize it while also protecting it.

See also: Step 1 to Your After-COVID Future  

Innovation is Defining the Future of Insurance

Each of these companies – and others I did not mention – are reimagining the future of insurance with the customer at the forefront. They are taking control of their future before someone else does. And they are doing it with a focus on both operational and strategic innovation, fitting within A.M. Best’s innovation criteria.

These companies and the winners are well along the path to becoming the innovation experts that will reshape the future of insurance. Congratulations to all!  I can’t wait to see next year’s innovative ideas come to life!

6 Key Ways to Drive Innovation

Insurers and intermediaries know that innovation has the potential to disrupt their current business and operating models. And they know that they need to innovate faster than their competitors to defend and grow their business. Yet few have found a winning formula for embedding innovation into their people, products or processes.

Feeling the disruption

The fact that new technologies, innovations and business models are changing the dynamics of the insurance market is clear. More than eight in 10 insurance executives responding to our recent survey, Innovation in Insurance, said that they believe their organization’s future success to be tied closely to their ability to innovate ahead of their competitors.

But with new entrants, new technologies and new business models emerging at an increasingly rapid pace, many insurers are also concerned that innovation will bring more disruption than value. Many are already feeling the heat. In fact, almost half of our survey respondents said that their business models were already being disrupted by new, more nimble competitors.

For some, the risk of disruption and the opportunity for competitive advantage is driving a renewed focus on innovation. In a recent interview with John Geyer, senior vice president of MetLife’s innovation program, for the report, A New World of Opportunity: The innovation imperative, he said: “If somebody’s going to disrupt our industry, it might as well be us.”

Indeed, new technologies are reducing losses and costs while saving lives and increasing customer satisfaction, reducing risks and driving new business models and consolidation within the industry. New advances such as driverless cars, machine learning, home sensors and “robo-agents” empowered with artificial intelligence and mobile payments offer a world of opportunity for insurers.

Screen Shot 2016-04-14 at 12.59.34 PM

The capacity and capability to innovate

While many insurers recognize the vast possibilities that innovation brings, many seem reluctant to be first out of the gate. This is not entirely surprising; most organizations responding to our survey reported that they lack the hallmarks of an innovative organization, such as dedicated budgets, formal strategies, executive-level support and measurement processes.

Even those that want to take first- mover advantage (as almost a third of our respondents’ claim they wanted) face significant challenges catalyzing innovation. In part, this comes down
to capacity: 79% of respondents across the globe told us that they were already running at full tilt just keeping up with their core requirements.

Capability is also a key concern. Lack of skills and capability was ranked by 74% of respondents as a top three barrier to innovation, particularly for smaller and mid-sized organizations and those based in Europe. Simply put, insurers know what they need to do to drive innovation but recognize they lack certain skills to achieve it.

Screen Shot 2016-04-14 at 1.00.28 PM

To be fair, most insurers have certainly been working hard to improve their innovation strategy and capabilities. Many have already implemented cultural change programs focused on fostering innovation and training programs to develop idea generation and innovation skills. Others have put their sights on widening their innovation ecosystem by engaging in partnerships with academics, FinTechs and other third parties to drive innovation. Some have even changed their business models or created innovation “hubs” or “labs.”

Lessons from leaders

Our experience suggests that while all of these previous initiatives are valuable, few organizations have been bold enough in their objectives or their execution to truly drive change. Based on our research, our interviews and our experience, we have identified six key ways that leading insurers are becoming more innovative.

  1. They are focusing on creating a customer-centric culture. While more than half of respondents say they have conducted a cultural change program in the past five years, our experience suggests that they may have focused their efforts in the wrong area. Rather than trying to become more innovative, insurers may instead want to become more customer-centric, which, in turn, will drive innovation.
  2. They are willing to disrupt their existing business models. Doing more of the same, only faster, is not a recipe for long-term growth. Leading insurance players recognize the need to innovate not only product and service development, but also how they approach innovation itself. Insurers and intermediaries need to be willing to try new models and partner with new stakeholders to truly compete in an innovation-led competitive marketplace.

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  1. They apply agile and dedicated leadership. Innovation requires leadership, strong executive support and clear vision. There’s no secret engine behind a door that creates innovative energy for an organization. It’s not about having the best game plan; it’s about having a coach who knows which players to put in the field to execute on the game plan. That’s how goals are scored.
  2. They mitigate risk by investing and experimenting. The best companies have discovered ways to link their investments to the expected frequency and severity of risks to ensure they are appropriately matching investment to risk. They have started to experiment with new business models. Looking at the viability of their current business model and the role of technology in their competitive strategy, they are also exploring new business models and businesses as the profile of risk changes.
  3. They understand why they are investing. While most organizations report that they measure their return on their innovation investments in some way or another, the leading insurers are working to ensure that they have the right alignment with business objectives and are broadening their metrics beyond simple financial ROI calculations to include more subjective measures such as public reputation or customer engagement.
  4. They learn from others. We believe partnerships will be key to future success, but we need the right structures, models and infrastructure to create value. Large organizations need to learn to partner, and all organizations need to learn to partner effectively. Consider alliances with partners outside of insurance to accelerate customer benefits and expand the value chain.

The road ahead

Our research and discussions with established and start-up players suggest that — to make the most of this new world of opportunity — the insurance industry needs to pivot from a traditionally risk-averse culture to one that encourages experimentation while mitigating financial risk.

To achieve this, insurers will need to tap into new sources of innovation, accessing fresh ideas from employees, customers, investors and partners, which, in turn, will require progressive leadership at the top of the organization.

The innovation imperative is clear for insurers. Now it’s time to make the most of the world of opportunities that exists for those bold and innovative enough to seize these opportunities to create competitive advantage.

Reprinted from (Regulatory Challenges Facing the Insurance Industry in 2016,) Copyright: 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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Google Applies Pressure to Innovate

This article was first published at re/code.

It’s a common thread in nearly every industry: Innovation occurs when consumers’ growing needs and expectations converge with intense competition. It’s no surprise, then, that insurance — not exactly known for being on the forefront of technology — is one of the last remaining industries to innovate and fully embrace data, analytics and customer communication technologies.

Insurance is a complex purchase business with a convoluted ecosystem and ever-changing regulatory requirements that has kept the industry in a well-protected bubble from external competition for decades. Now in 2015, the announcement of Google Compare for auto insurance pushes the industry to innovate from a technology standpoint, but most importantly from a structural standpoint, by changing the way insurance companies interact with their customers. The reasons below outline why Google has the greatest chance to succeed where others have not.

A Lesson From Other Industries

Google has previously disrupted numerous industries to great success — think health, travel and navigation — mostly because of its dominance in search. Many of Google’s consumer-facing businesses have followed as logical next steps in the Google search process. For example, do you want to use Google to search for the best insurance company, or would you prefer to find the best insurance company with the cheapest policy? Do you want to use Google to find the route for your road trip, or would you prefer to have Google find you the best route? Google’s constant innovation stems from a simple but effective idea: Eliminate an unnecessary extra step (or steps) in the process, and give the consumer what they desire most — ease and simplicity.

There are some who believe that the tech giant may not be doing anything noticeably different from other aggregators in the auto insurance space. However, if its accomplishments in other industries tell us anything, Google will find a way to engage the consumer better than incumbent insurers do. Rather than writing its own business and determining individual risks, Google has teamed up with carriers of all sizes to reach customers efficiently, allowing them to quickly search, get rates and compare policies “pound for pound.” Already, this platform has helped shift the insurance industry’s emphasis on the customer by allowing peer-to-peer ratings and allowing consumers to openly disclose any negative or positive experiences, which will breed superior customer service and experience.

Millennials Trust Google

It is highly unlikely that Google will ever become a full insurance company with its own agents and underwriters, but Google brings a brand name that elicits trust and familiarity. This is especially true of Millennials, who are set to overtake Baby Boomers as the largest consumer demographic, at 75.3 million in 2015. When Strategy Meets Action reported in early 2014 that two-thirds of insurance customers would consider purchasing products from organizations other than an insurer — including 23% from online service providers like Google — it created tension in the insurance industry. These findings are largely a reflection of consumer discontent with insurance companies and their seeming lack of transparency.

Millennials do not trust insurance companies, but they do trust Google with just about every engagement they have with the Internet. And consumers trust other consumers: Google Compare’s user feedback platform brings transparency to consumers and requires the insurance industry to reevaluate how to effectively engage customers in a tech-driven environment. Pushed by Google’s unique insight into Millennials, traditional insurance companies must acquaint themselves with their new consumers, who are often considered impatient, demanding and savvy about social media.

Establishing a Preferred Consumer Platform

An eye-opening Celent study recently found that less than 10% of North American consumers actually choose financial service products based on better results. Instead, a vast majority places higher importance on ease (26%) and convenience (26%). Based on these findings, Google is using a business model that embodies the preferred consumer experience, a notion that is being reinforced by initial pilot results in California.

According to Stephanie Cuthbertson, group product manager of Google Compare, millions of people have used Google to find quotes since its launch in March, and more than half received a quote cheaper than their existing policy. Other new entrants, like Overstock, have reported issues with completion of purchase because consumers will browse offerings but still hesitate to complete their purchase online in a single visit to a website. Google’s platform is attempting to avoid this issue by announcing agency support through its partnership with Insurance Technologies, allowing consumers peace of mind by speaking to an agent before purchasing a policy — but maintaining the online price quote throughout the buying experience.

Potential for Future Growth

While Google Compare is beginning with auto insurance, work with CoverHound gives a glimpse into where it may be looking to expand. CoverHound’s platform specializes in homeowners’ and renters’ insurance, the latter of which is growing exponentially with the Millennial generation, who prefer to rent rather than buy. According to a recent TransUnion study, seven out of 10 Millennials prefer to conduct research online with their laptop, computer or mobile device when searching for a new home or apartment to rent.

Google Compare has also already shown momentum by recently announcing its expansion of services to Texas, Illinois and Pennsylvania, while adding a ratings system for each company it works with — much like the insurance version of TripAdvisor or Expedia.

The Bottom Line

Nearly every industry undergoes disruption when consumer expectations shift and businesses are forced to adapt and keep up. For decades, insurance didn’t have the kind of pressure from outside entrants that it is currently facing. Whether Google fails or succeeds early on makes little difference: Its entrance is a wake-up call. The more tech companies enter the space, the more traditional insurance must struggle to play catch-up.

These new entrants are helping to not only force innovation from a technology standpoint but also to bring an innovation culture to the industry so insurers can stay ahead of consumers demands around buying and customer service. Agents and insurance carriers have a level of expertise that is unmatched by the Googles of the world, but it will be wasted if insurers can’t figure out a way to integrate that expertise in a modern way and connect to consumers through different social channels.

The writing is on the wall, and how traditional insurance reacts will ultimately decide its relevance in the industry of the future.