As early as 2016 or 2017 commercial insurance will likely be bought and sold regularly over the Internet.
That likely-to-be controversial opinion is courtesy of Compare.com CEO Andrew Rose.
As he speaks to a reporter, in one breath Rose doesn’t mind sharing an opinion that may be unpopular with many people in the insurance industry.
“The Internet’s an irresistible force,” said Rose, who has a long list of insurance experience behind him.
Then in another, the president, CEO and founder of the Richmond, Va.-based tech company talked about how he believes insurance agents will be viable long into the future, and how his firm is helping small and mid-sized carriers compete in a market dominated by a handful of insurance giants.
Rose backed up his earlier statement with an aphorism – “Human beings are inherently lazy” – then added a bit of philosophy Internet companies like his tend to share:
“We are undefeated in our pursuit of simplicity and transparency.”
He was referring to the Internet’s ability to simplify processes like shopping for books or homes, downloading music or movies, or buying insurance.
Rose is one of the players at the center of Google Compare, a complex tech-insurance industry partnership that created an online auto insurance comparison tool, which made a big splash in March.
There are many who argue that Google Compare is no different than other internet comparison tools – Compare.com being one of those – and that the insurance industry itself already offers consumers the ability to get auto insurance quotes online and then buy coverage.
Some of those same people also say that many lines of insurance cannot be commoditized as auto insurance has been.
Bill Wilson, director of the Virtual University of the Independent Insurance Agents & Brokers of America, has said Google Compare is nothing more than another auto insurance comparison website that misleads consumers.
“What Google is doing has been done for at least 10 and maybe closer to 20 years now,” Wilson said. “There are all kinds of comparative rating websites. … from the usual Progressive Direct, GEICO, Esurance, Nerd Wallet, Quote Wizard, Bank Rate, carinsurancecomparison.com, and on and on.”
When reached for a comment Google spokesman Joe Osborne declined to talk about how the new partnership is going, any plans going forward or anything that Rose said.
“There’s nothing new that we can share,” Osborne said.
Rose talked about the future of online comparison insurance shopping at a Coffee Bean & Tea Leaf store in the Americana at Brand in Glendale, Calif. Following a speaking engagement in the northern part of the state, he went on a tour of California to talk to the media, with stops including the Wall Street Journal, the Associated Press and Insurance Journal.
Rose brought with him an assistant, Sara Woznicki, a 23-year-old marketing specialist. To illustrate the ease of Compare.com he asked her to input her personal information into Compare.com using a smartphone to demonstrate how easy it is to get insurance quotes.
Woznicki pays $650 per year for car insurance and is currently insured with USAA, but she got several quotes from $350 to $1,200 in about 15 minutes.
According to the Rose, the key difference between his website and other insurance websites is that compare.com offers accurate rates, not estimates or calculations.
This is what has been carried over to the deal with Google Compare.
The online comparison tool is a relatively simple portal. Punch in a ZIP code and hit enter, and that brings visitors to a form for basic information, like name and date of birth. The site also offers visitors a choice to “speed things up” via an autofill feature, which may be particularly convenient for those who are signed into Google’s Chrome browser. Their information is easily filled in and saved as they go along filling out the form.
This automation may seem like an affront to the traditional insurance buying process, in which an agent offers consumers guidance, answers questions, and then helps them find the right insurance at the right price.
But Rose said he believes he would be able to find common ground with groups like IIABA that have for some time pointed out there will be a need for agents long into the future, the common ground being that agents and insurers will continue to be viable, and that insurance won’t be so easily commoditized.
At least not right away.
Rose said to expect comparison sites to follow auto insurance soon with homeowners and renters insurance.
Following those lines will be recreational vehicles and boaters insurance.
Next will be simple workers’ compensation and simple business owners policies for small operations like hair salons or CPAs with a handful of employees, he said.
“You’re going to see the easy insurances fall first and then the complex ones fall later,” Rose said.
Rose believes that as technical capabilities expand, and buyers get used to the idea of purchasing insurance online, there will be a progressive march toward increasingly sophisticated self-service insurance transactions.
U.K. to U.S.
Compare.com is majority owned by the U.K. auto insurer Admiral Group LLC. Rose pointed to the U.K. as a model for how he feels other countries, including the U.S., may eventually evolve.
According to Rose, 70 percent of all insurance shopping in the U.K. is done through comparison sites. It’s a figure attributed to him quite often in the media, a figure that can also be found in Admiral’s earnings reports. There are no known independent sources for these figures.
Rose gave his reasons that online insurance comparison tools are so popular in the U.K. as being low regulatory barriers – there aren’t 50 state insurance commissioners to deal with, plus the District of Columbia and five U.S. territories – low insurance agent penetration and people in that country are accustomed to shopping online more.
However, in the U.S. a segue to shopping for insurance online has already been made thanks to the Affordable Care Act, which is getting the masses use to the idea of applying for insurance online.
“You’ve got tens of millions of customers out there being conditioned to shop this way,” Rose said.
Rose wouldn’t disclose details of Compare.com’s deal with Google. He declined to answer questions like how much money’s involved, nor would he talk about any immediate plans for expanding offerings on Google Compare.
Also part of the Google Compare deal are San Francisco-based CoverHound and BOLT Solutions Inc., a property/casualty insurance distribution platform provider.
Google Compare and Compare.com do not charge customers to use the site. Compare.com charges carriers a flat fee per sale based on the segment of business. A carrier is only charged if a customer actually buys its policy.
Compare.com then uses that money to advertise on behalf of the carriers. As with the compare.com site, the rate on Google Compare doesn’t change when the customer leaves the site or calls the listed phone number to purchase.
According to Rose, this has been a critical part of his company’s success because consumers can finish their transaction without any other costs.
Even before the Google Compare announcement, which Rose acknowledged was a good business move for his company, Compare.com was adding carriers at a good clip.
The company launched in March 2013, and in a short time it grew from two dozen carrier partners to 50. Carriers working with Compare.com include the General Insurance, Infinity, Liberty Mutual, Mercury Insurance and The Hartford.
In February the company announced a name change from Comparenow.com to Compare.com, saying it was simplifying its name to better align with its services.
Real Estate Comparison
Rose envisions online insurance comparison shopping shift in the U.S. shift mirroring what has occurred in the real estate industry.
He illustrated his point with a story about the process he and his wife went through recently to buy a home in Richmond.
First they looked through online real estate sites, like Zillow.com and Trulia.com. Finally, when they had narrowed their choices and had a good understanding of what they wanted and how much they were willing to pay, the couple called a real estate agent to help close the deal and make a successful bid on the home.
“An insurance agent can still fill that role for the complex things,” he said, comparing the evolving role of the real estate agent to his near future view for insurance agents.
Real estate may be an apt comparison, since Google recently moved into mortgages with mortgage comparison tool as part of its Google Compare service.
As Rose see things, Compare.com is actually helping the insurers that lack the sophistication and resources of the big players – like GEICO Corp., Progressive Corp., Farmers Insurance Group – or as he put it, Compare.com “levels the playing field” for its insurance partners.
“We give the unsophisticated carriers the opportunity to present themselves to consumers,” he said. “This is a lifeline for carriers that can’t spend a billion dollars in advertising.”
Compare.com this year is set to go big on advertising.
“We’ll spend $100 million in advertising this year,” he said.
That’s a lot, but not quite in league with the likes of GEICO, which boosted its ad spend by just over 5 percent in 2013 to $1.18 billion, according to research by SNL Financial.
Rose comes from an insurance industry background. His is managing director of Compare.com parent Admiral Group Plc. Up until 2011 he headed Elephant Auto Insurance. From 2006 to 2008 he was with Bank of American and worked with the company’s asset Countrywide, and before that he was a product manager at Progressive.
The University of Virginia MBA graduate has a science background as well, having earned a bachelor’s degree in chemical engineering.
While he likes to look ahead, Rose seemed a bit stumped when asked just how the U.S. switch to more online insurance transactions will go down or when.
“We’re not going into commercial anytime soon,” he said.
“Anytime soon” may be considered a long time only in the tech world. It’s Rose’s estimate that by 2016, or 2017 online commercial insurance transactions will start happening regularly.
When Compare.com is ready to start offering commercial lines of insurance, Rose said he’ll begin consulting with experts to make that happen.
“We’re not even talking to them,” he added.
After a short pause in the conversation, and without prompting, he drove home a point he wanted to get across before departing for another interview:
“Make your life simpler.”
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