The Insurance press has been filled with two contradictory stories this past week, both of which involve Google. The first is the news that several insurers, in SEC regulatory filings, highlighted driverless cars as a potential risk to their future earnings. Several industry pundits have forecasted that accidents will plunge with driverless cars with the result that insurance premiums will also decline significantly. Google has been at the forefront of the research in driverless cars. In fact, people have speculated that the recent news about Apple and driverless cars is just Apple trying to get some of the buzz back from Google!
In the last few days we have also had news that Google is getting into the Insurance business (or at least being an insurance agent) by fronting sites like Compare.com. In the UK these types of sites have pretty much wiped out the old fashioned auto and home insurance agents. The main streets of towns in the UK are bereft of the Allstate, State Farm, and Nationwide signs that you see everywhere in the US. Clearly the US is behind the UK when it comes to web based aggregators like GoCompare.com. With its commanding web presence, one can see why Google would find the online insurance market attractive.
But why enter a market that you are in the process of destroying? Will one division of Google make a significant effort to enter a market only to see it wither away due to technology from a competing division at Google? Also, Google’s efforts in the driverless car arena are truly innovative and socially beneficial (as I pointed out in an earlier blog post). Competing with on-line aggregators smacks of me-too behavior. Insurers looking at what Google is doing should prepare for the driverless car and not be distracted by Google as a competitor.
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