Reports indicate that Google is calling it quits on the insurance business.
Just over one year after the search engine titan announced it was launching an online comparison service for auto insurance, partners with Google Compare say they were informed the company is shutting down the operation on a global basis.
Insurance Technologies Corp., the Texas-based software provider that powered Google Compare’s back-end rating system, was told directly by the company Monday that it will close its entire online comparison business over the next 30 days. Other carriers partnered with Google confirmed the pending exit.
Google did not immediately respond to requests for comment, but it is believed the firm will make a formal announcement on Tuesday.
Both partners and competitors of Google say they were not surprised by the news.
“It wasn’t overly shocking – it’s always been strange that Google came into the industry,” Laird Rixford, president of ITC, told Insurance Business America.
Rixford observed that as Google’s main revenue source is keyword-based advertising, the extension into auto insurance essentially “cannibalized” the company’s $50- to $300-per-word revenue stream. Now, he expects Google to return to its core competencies while the appetite for online comparison services is left to other competitors.
One such player is The Zebra, an Austin-based comparison company that recently closed $17 million in Series A funding. Chief Executive Adam Lyons told IBA
that The Zebra had passed on the opportunity to work with Google, and that the company’s exit provides a powerful lesson in making online insurance services work for consumers.
“Auto insurance is a complex product and a lot of folks underestimate that,” Lyons said. “I think Google really focused on the pricing piece, and while that approach works very well for some products, you need to be more involved and have a deeper understanding of others. Insurance is proving to be one of those.”
As such, a focus on education and human relationships will drive the success of other players in the space, Lyons said, stressing that the insurance agent role is not one that will vanish quickly.
Regardless, agents should not interpret Google Compare’s exit as “time for a victory lap,” warns Rixford.
“Agents need to remain vigilant,” Rixford told IBA
. “The consumer has changed over the years and the opportunity to meet their needs and can be met by today’s independent agents” through online comparative raters and other technology.
“Don’t rest on your laurels,” he said.