Google could be gearing up for entry into insurance market

Published: June 9, 2015

Updated: July 24, 2018

Author: Callum Micucci

CATEGORY: |

Share:

As Google continues its foray into the American automobile market with self-driving cars, questions are surfacing regarding its plans for its new online insurance comparison site and the possibility of the data giant underwriting its own policies.

Google Compare Auto Insurance debuted in the US of March this year (it’s been available in the UK since 2012) and offers customers the chance to compare insurance quotes from up to 12 different American insurance companies.

Valerie Raburn, chief innovation officer at Xerox’s insurance division, writes in the Wall Street Journal this week that while at first glance this appears to be “just another revenue stream” for the Silicon Valley company.

However, Raburn thinks it could be somewhat of a recon mission for the company as they gear up to enter the insurance marketplace themselves. They see all the demographic information that the user enters into the form, as well as what the insurance companies are spitting out.

It makes a lot of sense. Whether you peg it as a smart business strategy or outright spying, Google is known for collecting data, and a lot of it. Now they’ve been collecting data about people and their insurance premiums while they continue to develop and test their autonomous cars.

“This broad understanding of how auto-related risks are priced in the competitive market could allow the company to insure tomorrow’s vehicles, or simply roll the cost of insurance into the retail price of Google’s own driverless car once it hits the market,” writes Raburn.

That’s another problem current insurance companies are undoubtedly wrestling with: what happens to the average insurance premium once you take human error out of the equation and off the roads? Does the risk of an accident shrink to almost zero? Do premiums shrink drastically to reflect that?

Google could be thinking about capturing this piece of the market before it even exists, and the prospect of insurance being rolled into the cost of the car would be enticing to those who don’t like dealing with insurance companies and monthly payments.

Autonomous cars could even take several cars off the road, as ordering a driverless car might be an option in the future.

As Raburn warns, while Google’s current endeavour into the online insurance comparison business may only draw some consumers away from the big name players in the short term, in the long term, a giant company like Google has the potential to muscle the big names out of the game entirely.