Google Searches for Car Insurance Gold

Less than two years after Google purchased the car insurance comparison website BeatThatQuote.com for $61.5 million, the data giant has launched two similar services in France and the United Kingdom.

The U.K. site has been fully operational since 2012, offering consumers car insurance quotes from more than 125 providers. The French site is still in beta mode, partnering with only six insurance companies after being online for less than six months.

Google’s entry into the car insurance comparison marketplace highlights the value of the online market. In Europe, online car insurance comparisons have become a billion-dollar business as consumers there turn to the internet to purchase their policies. In the U.K., Coverhound.com estimates that some 80 percent of policyholders bought their coverage online.

Europe’s embrace of online insurance purchasing is greater than in America. In America, only about 70 percent of consumers even get quotes online, according to comScore, and fewer than that continue on to purchase a policy.

Most American consumers go through a broker or agent to purchase car insurance. Companies such as Coverhound.com, OnlineAutoInsurance.com, CarInsurance.com and a host of others have entered the online market in anticipation that the market will grow.

Only about 5 percent of Americans purchase their policy online, according to Coverhound.com CEO Basil Enan.

“And of that,” said Enan, “less than 1 percent use a comparison service.”

The big question for these companies is whether Google will enter the U.S. market, and in what capacity. Google already started showing insurance companies with their respective J.D. Power and Associates rankings next to them in the paid search results section this summer.

“It’s a natural for Google to go on this path,” said Insurance Information Institute spokesman Michael Barry. “Data is their strength, and they’re big enough to change how people shop for insurance.”

Challenges for U.S. Marketplace Entry

While the potential marketplace may be on the verge of significant growth, Google’s car insurance comparison service could face some challenges in the U.S.

Google’s EU platform allows consumers to shop and compare rates, then buy insurance policies through the site. In some U.S. states, that type of sales model would make Google an insurance broker or agent, which would mean Google would have to register as an agent or broker and comply to a host of laws that vary state by state.

“It’s 50 different states,” Barry said. “Maybe it’s easier to do this in France and overseas; they don’t have to deal with 50 different insurance commissioners over there.”

Enan agreed, and added “I don’t think Google has the appetite to buy insurance licenses in each state.” The Coverhound.com CEO said Google’s entry into the American marketplace could be difficult due to the varying regulation.

Meanwhile, it’s estimated that Google makes up to $45 per click on car insurance online ads, a rate far higher than many other ads generate for the company.

Enan said Google’s current U.S. business operation is already proving to be successful, and the company might not want to trade more income for more regulatory exposure.

“They have a good thing going in the U.S.,” Enan said. “I don’t know if Google has any interest in disrupting themselves.”

Google is also being challenged by other rivals, including Yahoo and Bing, which are believed to be working on insurance comparison sites for several different lines.

“You could get to a point where when you think car insurance, you think Yahoo, and you don’t even bother searching Google when looking for a policy,” Enan said. “Google has to stay ahead of that curve.”

A Google Tide that Could Lift All Boats

While it’s unclear what the powerful tech company will do in the U.S., the car insurance comparison in the U.K. has several different product lines that appear to be promising revenue generators. Like many other comparison sites, Google has the option to sell information collected from online searches to insurance sales companies as leads, which in itself is a lucrative business.

Google’s car insurance comparison site also benefits to the consumer, and to the insurance industry.

Insurance Information Institute’s Michael Barry noted that Google’s U.K. business offers quotes from more than one hundred companies. That creates a competitive marketplace for the consumer, and should result in lower cost auto policies.

“The question a consumer should have with price comparison sites is what percentage of the market is providing quotes to them,” said Barry. “Anything higher than 70 percent or 80 percent [of all insurance companies] generally means a savings for the consumer.”

Enan, meanwhile, said Google’s foray into auto insurance would raise the profile of online auto comparison shopping, especially in the U.S. Enan believes that awareness would help his business, as well as sales for insurance companies.

“The market pie is so big, and online comparison is a model we expect to dominate the U.S. in the next 5 to 10 years,” Enan said. “A rising tide lifts all boats. With Google planting this seed, even in Europe, it could help change consumer behavior” so that more auto policies are purchased online.

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