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Google is changing the insurance market forever

The Nordic Long Term Savings Market

In 2011, Google bought an “aggregator” or the price comparison site BeatThatQuote for £ 37.7 million. The site won an award for best start-up in 2006 and was ranked as the UK’s  most rapidly growing website in 2007 in a report from Nielsen Online. Since then the market for car insurance and mortgages has changed forever in the UK. Quite suddenly, it is the relationship we have with Google that will determine which car insurance policy the customer takes out. It goes without saying that it is hard for the insurance companies who often have a dialogue with their customer once a year, when the premium is about to be renewed, and will have difficulty in competing with Google. It is also a challenge for the competing price comparison sites.  So what is Google doing? Well, they give the customer the option to choose a car insurance policy that suits them best. Nothing strange. No hidden commissions or kick-backs. Google’s established business model of offering adverts works on the site at least as well as before.

Disruptive Innovation Ahead

In Sweden, we have seen a couple of price comparison sites that offer different insurances mostly within non life insurance. A possible ban on commissions, have been created an interest for them to also begin comparing personal risk products. Experiences from the UK according to our expert Mike Jennings, indicate that customers often choose prices in a comparison of the company’s premium before completing a health declaration and risk assessment. This has meant that some companies with really low premiums have tighter risk assessment criteria and the customer may not sign; few customers then manage to complete an additional health declaration are therefore left without cover. Other companies have followed suit which has led the company’s products becoming more similar.  A further consequence is that the companies that have questions about the applicant who has been denied insurance with another company now have a different and more diffuse meaning. The companies that denied insurance are more important because of the criteria rather than those who are denied. If the rule remains, the company risks denying someone for the “wrong reason”.

What the situation will be in Sweden remains to be seen, but we have noticed that the actors are beginning to adapt their processes. We see among other things a transfer from Big T – where teleunderwriting is done for all applicants to Small t, where teleunderwriting is done for those people who do not have a clean bill of health. Some actors have therefore introduced some form of automated risk assessment via digital questionnaires, often with a limited number of questions. But there is room for continued streamlining of the process for handling health declarations and automated risk assessment. In the UK, the insurance companies started a “quote portal” where the company presented its clear case premium and it is from here that many aggregators get their prices. But this means that they must implement each company’s health declaration and risk assessment in order to obtain a “binding” fee on the premium. Whether we get to see one of the insurance companies’ common premium portals (unlike premium centres) or if the time is not ripe for a more sophisticated solution which makes up for many of the shortcomings which we saw during the year in the UK remains to be seen. We have brought in the help of Mike Jennings as we are now developing a solution to streamline and redefine the process for automated risk assessment.

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“Digital disruption describes the collision that’s happening as consumers rapidly embrace new technologies to make their lives easier and companies of all sizes use those new technologies to offer people better experiences – better ways to bank, to read, to fall in love, to live their lives. All of these things are accelerating so quickly that it’s breaking or disrupting the old ways that we used to do these things and it’s disrupting the ways that businesses operate. Companies that participate in this change will succeed, but those that don’t join in the disruption will find that they are no longer relevant to their customers.”  Read more in the article below, Customers first. Digital disruption explained by James McQuivey at Forrester.