Tag Archives: stephanie cuthbertson

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.

What Is the Future of Google Compare?

It’s one of the worst-kept — and surely most disruptive — secrets in the U.S. insurance market. Soon, Google could be piloting its Google Compare auto insurance comparison shopping site in the U.S., following the lead of its 2012 Google Compare UK rollout.

But the launch of Google Compare in the U.S. apparently hasn’t been easy. Even though insurers have been telling me for more than two years now about Google overtures to participate on the comparison site, the Google Compare U.S. site launch keeps getting pushed back.

One thing is for sure: Google Compare is going to have big implications for U.S. insurers.

While doing the research for a report on what Google Compare is going to mean for insurer strategies in 2015, I took a look at a bunch of state insurance commission filings to see just what was up with the entity now officially doing business as Google Compare Auto Insurance Services Inc. What did I learn?

  • They’re licensed to do business in more than half the states. Along with California, the entity is licensed to do business in at least Alaska, Arkansas, Arizona, Delaware, Florida, Idaho, Illinois, Indiana, Louisiana, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Texas, New Jersey, Washington, West Virginia, Wisconsin and Wyoming. There may be more in process.
  • They’re working with a handful of identified insurers. Among the insurers that Google is authorized to transact business on behalf of are Dairyland, MetLife, Mercury, Permanent General Assurance, Viking Insurance of Wisconsin and Workmen’s, meaning that many others are likely taking a wait-and-see approach before jumping on.
  • The corporate officers haven’t worked in insurance. Stephanie Cuthbertson, who is acting as president, is listed on LinkedIn as a project manager at Google. Kenneth Yi, acting as secretary, is listed as being in securities and corporate governance. Meredith Stechbart, acting as treasurer, is a regulatory operations program manager. The lack of insurance chops means that they may think differently about insurance or at least are good at dotting the i’s and crossing the t’s that state insurance departments demand.
  • The corporate treasurer added CoverHound to her California producer license. On Dec. 9, Stechbart added CoverHound as one of the companies she’s authorized to transact business on behalf of, on her California individual producer license.

What could this mean? As much as I’d like to imagine someone could become so enthralled with the insurance industry that they’d leave a job at Google to become an insurance agent, there’s a more logical explanation. Acquiring CoverHound would get the Google insurance entity to market faster in the U.S. than it’s been able to get on its own; it would get Google a national, full-service independent agency with more insurers than have already signed on. CoverHound’s San Francisco headquarters is conveniently close to Google’s Mountain View campus, and CoverHound would give Google the kind of insurance chops that the company will really need should it decide it really likes the insurance business. And an acquisition might explain this most recent delay.

I reached out to Stechbart through LinkedIn to see if she’d answer a couple of questions I had about her California producer license. My request did prompt a look from her at my LinkedIn profile but not a response.

Time will tell.

This article originally appeared on the Forrester Research site.