#auto insurance compare
Will Google s auto insurance comparison platform disrupt how auto coverage is sold?
Apr 20, 2015 at 7:35AM
Google (NASDAQ:GOOG ) (NASDAQ:GOOGL ) recently made headlines by unveiling its much anticipated auto insurance quote comparison tool. By partnering with Compare.com and Coverhound, the new interface gives consumers a single point of interaction to get auto insurance quotes from multiple providers. Currently only available in California, the new platform is designed with a focus on helping consumers find auto insurance options with the best prices.
While a lot of the media coverage has proclaimed this to be Google’s entrance into the auto insurance industry, the truth is that the company has long had a role in the insurance acquisition funnel. Google Adwords (the company’s paid search business) benefits immensely from advertising dollars spent by insurance carriers. For keywords related to “auto insurance” the company suggests advertisers bid as much as $80 for a single click.
It is difficult to get exact numbers on what paid search brings in from auto insurers but rough estimates derived from search volume suggest that top insurers spend tens of millions annually for such traffic. Through the comparison shopping platform, Google would instead earn revenue through a commission model typically referred to as CPA (cost per action), getting paid only when policies are sold.
If Google can manage to establish comparison shopping for insurance, it would certainly present significant upside for insurance-related revenues. Though the company has had success in doing just that in the UK, investors looking at the same prospects in the United States will want to remain cautious.
Buy-in from auto insurance companies key to success but uncertain
One of the long standing issues with insurance comparison platforms in the U.S. has been participation among insurers. After all, much of Google’s offering relies on services already provided by Compare.com and Coverhound.
To date, many major auto insurance providers in the United States have refused to voluntarily participate in any form of quote comparison services. GEICO, Progressive (NYSE:PGR ). Allstate (NYSE:ALL ). and State Farm — the largest private passenger vehicle insurers in the nation are conspicuously absent from the list of carriers providing quotes in California. USAA, which offers a number of financial services to military members and their families, is also absent. Not only do these companies have among the most competitive car insurance quotes in many states, from California to New York. but they also have an overwhelming percentage of market share.