Aggregators: They’ve become so common that most people don’t even think about them, much less the effect they have had on commerce.
I’m talking about aggregators of all types: the websites, apps, and social entities that pull data from a whole bunch of different sources and make them all available in a single place.
Booking trips — once the realm of the travel agent — has become a battle of online airfare aggregators. Priceline (NASDAQ: PCLN), Orbitz (NYSE: OWW), Travelocity (NASDAQ: SABR), Kayak (NASDAQ: KYAK), Tripadvisor (NASDAQ: TRIP), and Expedia (NASDAQ: EXPE) are just a few of the most popular services jockeying to pull users by finding the cheapest tickets.
Shopping for goods online, reading news, comparing product reviews… These activities are all handled by aggregators.
Though Google (NASDAQ: GOOG) is best known for its dominance in online search, it is a major force in data aggregation, and the company’s next project in the United States will be aggregating insurance policies.
Buying its Way into the Party
Long gone are the days of the telephone insurance salesman. The Internet is the key growth platform for personal insurance distribution in the United Kingdom, and there are hard facts to back it up.
Insurance aggregators first began to gain popularity in the UK in 2006. By 2009, over half of all auto insurance and 36% of home insurance was bought through an online aggregator.
In 2013, market research organization Finaccord said aggregators were the single most important distribution channel among new buyers and “switchers.”
The UK insurance market is high churn and driven by low cost, so switching is common, and it’s an ideal situation for price comparison sites.
Because of this, sites like Money Supermarket, Compare the Market, and Gocompare.com all grew in popularity.
But according to Nielsen Online, the fastest-growing site in that early bunch was BeatThatQuote.com, and in 2012, Google plunked down $57 million to acquire it.
It acquired its way into a market that had been developing for more than six years.
Now, on its site called Google Compare, users can input information about their current or future car and then receive quotes from 125 insurance providers, all of whom are partners in the service.
A similar service is reportedly about to go into its pilot phase here in the United States.
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In the States
In a recent bit of market research, Forrester analyst Ellen Carney showed that a company called “Google Compare Auto Insurance Services Inc.” is licensed to operate in 25 U.S. states, with licenses to sell insurance on behalf of some large providers.
While U.S. insurance providers like Geico and Allstate tout the simplicity of signing up for their services, Google would make it even easier to compare prices and sign up for a policy.
The icing on the cake is that Google would get a commission every time a user signs up for a policy, no matter who the provider is.
This is a big deal because insurance aggregators have been anything but successful in the U.S. up to this point.
Esurance used to be an independent aggregator, but it was acquired by Allstate. Netquote, Insurance.com, Insure.com, and Insweb.com are all domestic insurance aggregators, but market-dominating Google threatens to overtake all of them in short order.
Why?
Because Google has access to far more user data than anyone else — more than these aggregators, and more than independent insurance companies.
In short, it can utilize big data risk analysis that hasn’t been possible in the past.
PricewaterhouseCoopers predicted back in 2012 that big data will transform the commercial insurance business model, and it could scale down to individuals.
“Carriers may no longer need to compete on price; they instead may be able to assess the risk of individual customers based on their actual behaviors,” the report said.
And our behavior is something Google is pretty good at knowing.
If you have any doubt about how well Google knows you, check out your Google ads settings page. Chances are good that it’ll nail your gender, age, and from 25 to 100 different potential interests of yours based upon your activity on Google and the websites you’ve visited.
It’s unsettling, yes… but it might also get you a cheaper insurance rate.
Good Investing,
Tim Conneally
For the last seven years, Tim Conneally has covered the world of mobile and wireless technology, enterprise software, network hardware, and next generation consumer technology. Tim has previously written for long-running software news outlet Betanews and for financial media powerhouse Forbes.
