As Google Enters Auto Insurance Market, Comparison Sites React; Agency Partner Raises Financing

Last week, Google’s anticipated US version of its compare product for car insurance finally arrived, making waves throughout the auto insurance industry.

Google, which launched a similar product in the UK in 2012, debuted the US version in California and has plans to roll out the comparison site to other states in coming months.

Google Compare Partner Lands Financing Round

Google’s key partner in the US is online insurance agency CoverHound, which announced Monday that it has secured $14 million in Series B financing. CoverHound had been mentioned as a possible acquisition target by Google in a blog post by a Forrester analyst last month. The company, which provides real-time quotes from carriers and sells policies on their behalf, denied it then and reiterated to Marketing Land this week that it has not been acquired, adding “We cannot comment on anything more than that” when asked for more details on the partnership.

CoverHound says it will use the funding to keep adding more insurance carriers in more states in the U.S. The agency is currently quoting and selling policies in 46 states and has now raised over $20 million from a wide swath of venture capital firms. The Google ties have certainly helped CoverHound raise its profile and funding.

Comparison Sites Look To Google To Raise Awareness

While the partnership with Google signals a win for CoverHound, insurance sellers and existing comparison sites have been waiting to see how Google’s entry into the market will impact their businesses. Some say that they are cautiously optimistic.

Compare.com is a two-year-old comparison site operating in 48 states and working with 41 insurance carriers. CEO Andrew Rose says, “At this point, comparison in the US is a nascent market and we at compare.com believe any competitor offering a satisfying shopping process for consumers will only help to grow the overall market.”

Rose says Compare’s sister site, confused.com, launched in the UK in 2002 – a decade before Google entered that market – and that now more than 70 percent of new business comes through comparison sites. Rather than a threat, he believes Google will increase awareness for the industry overall. Google’s “addition to the US market will help to bring name recognition to the concept of comparison sites like ours, and raise the level of awareness around alternative means of shopping for car insurance online”.

That confidence is likley buoyed by the fact that Compare has been in the market longer and has much broader market penetration compared with Google’s single-state-14-carrier launch.

“Consumers will now be able to take shopping into their own hands, and are becoming more comfortable shopping online,” says Rose. “Comparing prices before making a purchasing decision is commonplace for items such as large appliances, travel packages and flights, and we’re on track to make comparing the norm for auto insurance.”

TheZebra.com, an auto insurance comparison engine that launched in the US in 2012 operates in all states and offers comparisons from over 200 carriers including the major players: Allstate, GEICO, State Farm and Farmers. The Zebra shows claims and customer service ratings alongside quotes.

Asked how Google’s entry into the US market will affect the industry, COO and co-founder of The Zebra, Joshua Dziabiak, echoes compare.com’s Rose. “Google entering the game propels the entire market forward in terms of awareness and acceptance on the part of consumers,” says Dziabiak.

Still A Role For Independent Agents, Though They’ll Have To Adapt With Consumer Shift

Consumers can buy policies through TheZebra.com, though the company says it helps feed independent agents with feeds when possible. Asked how independent agents will fare in this shift, Dziabiak stressed, “We believe that there will still be an important role for the independent insurance agent. There are many different lines of insurance, specialty products, & complexities that still require the need for human intervention. However, they too will need to evolve and adapt to the change in consumer shopping behavior and advancing technologies alike.”

Will Optimism Fade When Search Results Change?

Google is already licensed to operate in over half of the US and is working with insurers such as MetLife, Mercury Insurance and 21st Century Insurance, though the top four have not signed on. The company plans to add ratings and reviews to the product and participation is priced on a cost-per-acquisition model.

While there is speculation that Google is getting into the insurance business to learn more about the industry in preparation for a tie-in with its driverless cars, in the nearer future, we can expect Google Compare to be featured more prominently on Google.com when it carves out a billboard of its own in the search results.

At some point, users will begin seeing a sponsored results box for Google Compare for Auto Insurance just as they do for other products like Google Compare for Credit Cards (shown below), Flight Search and Hotel Search.

These sponsored boxes are independent of the AdWords ad auction and the organic results — giving Google an advantage within highly competitive verticals.

That said, while Google has made inroads in these markets, it hasn’t always succeeded or dominated. Today, Compare for Credit Cards is all that is left of Google Advisor, which launched in the US in 2011 with comparisons for mortgages, CDs and checking and savings accounts.

Compare in the UK, however, has given Google experience and the company also appears to be making moves to get back into mortgage rate comparisons — incrementally as it’s doing with auto insurance — and build out Google Compare offerings in the US.