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Google Thinks the Insurance Industry May Be Ripe For Disruption
HughPickens.com writes: The insurance industry is a fat target — there's were about $481 billion in premiums in 2013, and agents' commissions of about $50 billion. Now Conor Dougherty writes in the NYT that the boring but lucrative trade has been attracting big names like Google, which has formed a partnership with Comparenow, an American auto insurance comparison site that will give Google access to insurers in Comparenow's network. "A lot of people are waking up to the fact that it's a massive industry, it's old-fashioned, they still use human agents and the commissions are pretty big," says Jennifer Fitzgerald. It may seem like an odd match for Google, whose projects include driverless cars, delivery drones and a pill to detect cancer, but the key to insurance is having lots of data about people's backgrounds and habits, which is perhaps the company's greatest strength. "They have a ton of data on where people drive, how people drive," says Jon McNeill. "It's the holy grail of being able to price auto insurance correctly."
People in the industry and Silicon Valley say it is only a matter of time before online agencies attack the armies of intermediaries that are the backbone of the trade, and Google could present formidable competition for other insurance sellers. As many as two-thirds of insurance customers say they would consider purchasing insurance products from organizations other than insurers, including 23 percent who would consider buying from online service providers such as Google and Amazon. Google Compare auto insurance site has already been operating in Britain for two years as a search engine for auto insurance prices.
People in the industry and Silicon Valley say it is only a matter of time before online agencies attack the armies of intermediaries that are the backbone of the trade, and Google could present formidable competition for other insurance sellers. As many as two-thirds of insurance customers say they would consider purchasing insurance products from organizations other than insurers, including 23 percent who would consider buying from online service providers such as Google and Amazon. Google Compare auto insurance site has already been operating in Britain for two years as a search engine for auto insurance prices.
Their cars aren't on the market yet. They have no data on my driving.
Hmm... this leads to an interesting thought. Google may be looking to insure their cars. Insurance is one of the most notable burdens that autonomous cars will face, with the question of who will pay in the case of an accident (the manufacturer or the owner's insurance company).
If Google underwrites both manufacturing and insurance, they might be able to easily skip that hurdle altogether and gets the cars on the market faster.
All my liberal friends think I'm a conservative, all my conservative friends think I'm a liberal.
The traditional life/health/auto insurance markets have been the target for the next collateralized security market. With some quiet legislative changes to insurable interest regulations, the likes of Goldman Sachs will soon be shorting your grandfather's life*. And once that market becomes established, the holders of the most valuable behavioral data will have an advantage in pricing the various tranches of risks properly. That would be Google.
*There has been legislation proposed at State and Federal levels (already passed?) allowing "poor old grandpa" to sell the future benefits of his life insurance, which he has been paying premiums on for years, for a lump sum of cash he can use while he's still alive. Once this new paper hits the securities market, is bundled and then sliced into risk pools, we have the makings of the next securities crisis. Watch for terms being used in the investment community like "catastrophic longevity" and think about the people who will be lobbying against the FDA's approval of the next miracle cancer cure.
Have gnu, will travel.
Google provide a la cart pricing.
Now that would be interesting. "You drove for a total of 6 hours and 51 minuets last month and major metro area, using your own vehicle presently valued at $X" You bill based on the risk you exposed us to is $Y.
That could be interesting.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
My brother has an app on his smart phone that not only reports host fast you are moving, but if you're moving faster than some set speed, it puts the phone on silent. He longer gets bothered by his phone ringing or flashing him while driving.