by Bill Wilson, CPCU, ARM
Assoc. VP, Education & Research
Independent Insurance Agents & Brokers of America
Abstract:
Google has launched its “Google Compare” auto insurance comparison website for California consumers, perhaps Google’s first step towards a deeper immersion into the multi-billion dollar auto insurance marketplace. Right now, nothing really differentiates Google Compare from the many similar comparative rating websites, but it adds to the illusion that consumers really can compare insurance products and reach purchasing decisions online. Caveat emptor anyone?
In “A Day in the Life” by the Beatles, John Lennon sang:
I read the news today, oh boy,
About a lucky man who made the grade.
And though the news was rather sad,
Well, I just had to laugh….1
I read the news today about “Google Compare” but found nothing to laugh about. Another day, another auto insurance comparative rating website. And another auto insurance comparison website that misleads consumers into believing that what they’re going to get is a true product comparison on which they can make a purchasing decision. Nothing could be further from the truth or closer to potential catastrophe for American consumers and families.
Google Compare’s Claims
The news of Google Compare’s launch sent me to their official blog where I found the following [emphasis added]:
Whether it’s buying the right car insurance or finding the best credit card, people want an easy way to understand and compare financial products online. In fact, when it comes to buying car insurance, 80% of drivers think they’d find a better policy if they could compare more than two providers.* That’s why today we’re introducing Google Compare for car insurance in California, with more states to follow. This represents the newest addition to a suite of Google Compare products designed to help people make confident, more informed financial decisions.
Google Compare for car insurance provides a seamless, intuitive experience for connecting with your customers online. Whether you’re a national insurance provider or one local to California, people searching for car insurance on their phone or computer can find you along with an apples-to-apples comparison of other providers -- all in as little as 5 minutes. You can highlight what makes your business unique, whether that’s an “A” rating in customer service or better discounts for safe drivers. And when users adjust their deductible or add additional cars to their quote, you can show updated pricing that matches their needs. They can then buy their policy online or over the phone through one of your agents.
What does this tell me? First and foremost, that whoever is behind this knows pretty much nothing about the insurance industry, its products, or practices. Let’s examine each of the highlighted comments above.
Rebutting Google Compare’s Claims
Comment: “people want an easy way to understand and compare financial products online”
Response: The only comparison provided is pricing, so consumers have no greater understanding of what they’re buying than a contestant viewing Doors #1, 2, and 3 on Let’s Make a Deal.
Nothing on this website enables consumers to “understand” or compare the product they think they’re buying. The site tells you absolutely nothing of substance about any individual insurance policy or the claims or service practices of the insurer. All it tells you is the price of an unknown product. If you were brought to a 7-bay garage knowing that a “car” was behind each overhead door, but the only information you had were the signs on the doors of each bay with prices ranging from $5,689 to $14,069, which would you choose? Obviously you don’t have enough information to make an informed decision, yet in the case of auto insurance you’re expected to buy based solely on price without seeing the product. Even “Let’s Make a Deal’s” Monte Hall didn’t allege that their contestants were making informed decisions.
Do consumers buy anything else like this? And, if you ASK to see the policy before you buy, you’re wasting your time. My attempt to do this on other websites resulted in a 100% rejection rate. Do consumers enter into any other kind of legal contracts where the drafter of the contract refuses to allow the purchaser to read the contract in advance?
Comment: “80% of drivers think they’d find a better policy if they could compare more than two providers”
Response: Comparing only prices in no way enables consumers to find “a better policy” since no distinguishing features among policies other than price are offered.
How could a driver possibly think they’d get a “better policy” when the only real comparative information they’re given is a price? I did a quote on the web site using a hypothetical 60 year old single California man with a 4 year old Honda Civic. The premiums I was quoted for $50/$100/$50 (what they offered, not what I asked for) liability and UM (the latter without PD), $5K medical payments, and comprehensive and collision, each with a $500 deductible ranged from $569 from “one of America’s Most Trustworthy Companies” to $1,407 from a carrier with “A Great, Low Rate With Flexible Payments To Fit Any Budget.” Even “Let’s Make a Deal’s” Monte Hall didn’t allege that their contestants were making informed decisions. Now, how is that comparing providers by any measure other than price?
Comment: “a suite of Google Compare products designed to help people make confident, more informed financial decisions”
Response: When the only “information” you are provided is pricing, how can anyone make a more informed decision?
How can a product comparison differentiated solely by price be considered, and lead to, an “informed” decision? Any consumers that buy into this claim have a misplaced confidence. This criticism is not limited to Google Compare. Pretty much every online comparative rating system shares this deficiency because it does not truly compare the products, nor does it ascertain the unique exposures of the consumer and match those exposures with the correct product, avoiding quoting products with potentially catastrophic coverage gaps relative to those exposures. Only a true insurance professional can do that and these systems are not sophisticated enough to do that because their only other “redeeming” feature is how fast they can give you a quote (which is likely not what you’ll actually pay once more complete information is provided).
Comment: “along with an apples-to-apples comparison of other providers”
Response: Comparing the same limits and deductibles is not an “apples to apples” comparison and those seriously claiming that are only demonstrating their ignorance of auto insurance products.
We see this “apples-to-apples” qualification in many consumer articles about shopping for auto insurance. What they mean is, make sure you’re comparing the same limits of liability, UM, and medical payments, and the same deductibles for comprehensive and collision. They invariably say absolutely nothing about the coverages, exclusions, conditions, and other features of each coverage that these limits apply to.
When you’re getting auto insurance quotes, especially if some of the carriers are predominantly known as “nonstandard” auto insurers, coverage differences can be substantial and potentially catastrophic. One of the better personal auto policies, the “ISO standard” PP 00 01 policy, is 13 pages long…the auto policy of one of the carriers featured on Google Compare is 76 pages long. How can these products possibly be comparable and differentiated on price alone?
Comment: “all in as little as 5 minutes”
Response: How many consumers buy any product this costly with as much at stake based on “fast and cheap”?
OK, we know that buying insurance is not a pleasant task for most consumers, especially (if we believe what we’re told) for millennials. Neither is going to the doctor. But, if my life is on the line, am I going to choose a physician based on how cheap he or she is and/or how quickly they can get me in and out of the office? Given that your auto insurance protects your assets and income, both of which can be imperiled in the event of a major uncovered loss, why wouldn’t you hold the seller of that product/service to the same high standards you’d want in a physician?
Auto insurance policies are complex legal contracts whose terms can vary significantly from one to another. Would a first round NFL draft choice enter into a contract without having that document carefully analyzed by an attorney or other competent professional? Then why would the same person even think about entering into an insurance contract that protects his assets without the advice of a competent insurance professional?
Apparently there is some sort of contest among some insurers or agents to see how fast they can quote a policy. According to my tally, this is where we stand right now:
GEICO 15.0 minutes
Esurance 7.5 minutes
Google 5.0 minutes
VA agent 5.0 minutes (a Virginia agent who also includes a $20 Starbucks gift card)
MetroMile 2.0 minutes (an Integon auto policy being marketed to Uber drivers)
TheZebra 10 seconds (a new world record!)
I went ahead and broke the quote times down to the tenth of a second because I’m sure someone is soon going to be offering quotes measured in tenths of seconds, not minutes. Now, think…what kind of loss exposure analysis can be legitimately offered in 5 minutes?
Again, Google Compare is not to blame for this. If we want to point a finger at anyone, we have to remember that three other fingers are pointing back at US. The insurance industry is largely to blame for saturating the media with advertisements focused almost exclusively on price and convenience.
Comment: “You can highlight what makes your business unique”
Response: What insurer can highlight in one sentence on Google Compare’s quotes and “in as little as 5 minutes” what makes them unique?
This section apparently is directed at carriers that Google would solicit to be a part of their comparative rating web site. What really makes an insurer unique is the products it sells and the services it provides, particularly claims services. To quote Metallica, “Nothing Else Matters.” Except price, that is, and apparently it’s ALL that matters on web sites like this.
The Google Compare Website…What You See is NOT Necessarily What You Get
So, I went to the actual Google Compare web site and got the quote I mentioned earlier. That web site says:
“Compare coverages, prices, and features to make an informed decision.”
Exactly what coverages and features are really disclosed? What if I sometimes rent cars on business…which, if any, of these policies covers that? What if I sometimes use my own car on business…some policies don’t cover business use of ANY autos. Some policies don’t cover rental cars at all. Some exclude any nonowned autos. Some policies cover pizza delivery, many don’t. And the list goes on. Aren’t these coverages (or lack thereof) material to any informed decision? Yet you will not find any information like this on any online insurance quoting web site I’ve ever seen. And, if you ask for a copy of the policies of the carriers being quoted, good luck.
The Takeaway
So, I say, another day, another auto insurance comparative rating website. This is not news. What would be news (and good news, at that) would be a comparative quoting website that allows you to read the contract (insurance policy) that you’re about to enter into and which discloses the material pros and cons of each quote from the standpoint of product and service.
The mission of every true insurance professional should be to carry the message to consumers that auto insurance is NOT a commodity, that there are differences in products and claims practices of insurers that do matter.
In the movie, “The American President,” the Michael J. Fox character Lewis Rothschild says to President Shepherd (Michael Douglas), “[People] want leadership. They’re so thirsty for it, they’ll crawl through the desert toward a mirage, and when they discover there’s no water, they’ll drink the sand.” The President responds, “People don’t drink the sand because they’re thirsty. They drink the sand because they don’t know the difference.”
Consumers do not understand the many, varied, and significant differences between auto insurance policies and insurer practices. Between our own price-dominated industry advertising and misleading consumer articles almost universally focused on “how to save money on car insurance,” we have conditioned the consuming public that the only thing that really matters is price.
As the song “A Day in the Life” continues:
He blew his mind out in a car.
He didn’t notice that the lights had changed.
A crowd of people stood and stared;
They’d seen his face before….2
It’s the face of yet another consumer whose life had been ruined financially because he bought an inferior product from a faceless online comparative rating web site. Let’s stop the carnage by being honest with the consuming public.
1 Written by John Lennon and Paul McCartney, © Sony/ATV Music Publishing LLC
2 Ibid.
Bill Wilson, CPCU, ARM is the Assoc. VP of Education & Research for the Independent Insurance Agents & Brokers of America. He has been writing and speaking on P&C insurance issues for 35 years.
Copyright 2015 by Independent Insurance Agents & Brokers of America. Reprinted with permission.
Last Updated: March 8, 2015