Google Compare may not have been a success. But don’t think Google is going to give up on the insurance industry.
Google’s decision to close its Google Compare aggregator business caught many insurers by surprise.
The search giant was widely seen as one of the front-runners of a pack of aggregators pushing into the insurance business. Moreover, Google has come to epitomize the rising threat to carriers of powerful digital corporations eager to expand their operations into the insurance market.
Some insurance executives will surely be rejoicing at Google’s apparent retreat from the insurance business. However, I don’t think Google is turning its back on the industry – not at all. I reckon it will launch another tilt at the insurance business. Here’s why:
- Despite its size, Google still operates like a Silicon Valley start-up. It identifies opportunities, moves quickly to capitalize on them, and then tracks its performance. If it fails, it quickly shuts down, and uses what it has learnt to launch new ventures. Just because Google Compare hasn’t delivered doesn’t mean Google isn’t going to try again.
- Google has closed and relaunched aggregator businesses before. It bought U.K. aggregator Beat That Quote in 2011, restructured the firm, and relaunched it as Google Compare in 2012. In the U.S. it closed Google Advisor and relaunched the business early last year under the Google Compare banner.
- The Silicon Valley corporation has a big interest in the insurance industry. Insurers spend around US$7 billion a year on advertising and Google receives a large slice of this expenditure. Google acknowledges that Google Compare generated little revenue and the aggregator might have become a hindrance to the corporation’s core business. It may now take a new approach to the insurance business and leverage its strengths in consumer data and digital ecosystems.
- Although Google is ditching Google Compare, it still retains licences to sell insurance in 49 states in the U.S. The large amount of expense required to secure these licences suggests that Google is looking long-term.
- Finally, Google hasn’t declared that it’s shut the door on the insurance business. It says it will focus on “future innovations” that provide its financial services partners with “the best return on investment”. My guess is insurance is going to be in the mix.
Google is going to be looking closely at its foray into the insurance business and learning all it can. Insurance providers should do the same. Three big learnings stand out:
- Don’t just watch what Google does; watch how it does it. Digital pioneers such as Google are showing traditional business how they must operate in an increasingly digital economy – start small, fail fast, learn, repeat and scale up when the time is right.
- Keep flexible. Google won over several insurers to participate in its aggregator service and joined forces with a few start-ups. The sudden closure of Google Compare is forcing them to quickly change their business plans. Some of the smaller firms may take a big hit.
- The digital transformation of the insurance industry is complex but irreversible. Google may not have got it right yet. But those that do will drive the industry in the future.
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