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Google Businesses The Internet

Google Thinks the Insurance Industry May Be Ripe For Disruption 238

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.
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Google Thinks the Insurance Industry May Be Ripe For Disruption

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  • Data mining (Score:5, Insightful)

    by sinij ( 911942 ) on Tuesday January 20, 2015 @02:50PM (#48858299)
    I would not want Google, a massive data mining company, to use its access to private and confidential information to sell anyone insurance. Just imagine "You searched 'hit and run' twice in the past year, and 'how to dispose of a dead body' once, your premium goes up by 1000%".
  • by xxxJonBoyxxx ( 565205 ) on Tuesday January 20, 2015 @02:53PM (#48858351)

    >> it is only a matter of time before online agencies attack the armies of intermediaries that are the backbone of the trade

    http://lmgtfy.com/?q=online+in... [lmgtfy.com]

  • Car hacking [securityaffairs.co] A security researcher demonstrated that “car hacking” is reality through the exploitation of vulnerable Can Insurance Dongle. Million vehicles at risk.
    • What stupid fuck would use an OBD2 dongle?! Yeah, goes it something goes bad and shorts the ECU (cause the dongle is cheap Chinese crap), I'm on the hook, not the insurance. You could file a claim =) Ohhh, the irony.

      Just a few weeks ago, my agent wanted to give me a paperless discount, and that I could keep my proof of insurance card on my phone. Yeah, like I want to hand THAT over to the police officer that pulls me over. I told her that, and she was like "you know, I didn't think of that". Well honey, I d

      • What stupid fuck would use an OBD2 dongle?!

        According to TFA, Progressive says, "We are confident in the performance of our Snapshot device – use in more than two million vehicles since 2008"

        • by dj245 ( 732906 )

          What stupid fuck would use an OBD2 dongle?!

          According to TFA, Progressive says, "We are confident in the performance of our Snapshot device – use in more than two million vehicles since 2008"

          And I have confidence that it was made in China by the lowest bidder. I had about a half-dozen "dead car battery" incidents during the several months that my car had their Snapshot device installed. After I sent the device back, the problems disappeared. I am not the only one to have a problem with the device draining my battery [google.com]. Many people had more serious [google.com] problems.

      • my agent wanted to give me a paperless discount

        I went paperless and got a discount. But my insurance company allows me to download PDFs of everything (including a PDF of the insurance card that I can print).

        • Not me, I go dead tree on all of my accounts. It isn't that much a discount and I like to have them do the printing and send me the records. I figure that's part of what I'm paying them for, why save THEM money that they don't truly fully pass onto me?
  • by sunderland56 ( 621843 ) on Tuesday January 20, 2015 @02:55PM (#48858373)

    So commissions are $50/$481 = about 10%. In other words, a fairly minor factor; you can usually save that by switching companies. Sure, it would be nice to chop 10% off your bill; but that is hardly a "major disruption". Even a caveman can chop 15% off your bill; who needs technology?

    Most major carriers are moving towards online services already. If Google enters the market, their efforts can quickly be matched, leaving no net advantage for Google.

    • Thats not how this works. That's not how any of this works.

      I saved twice that in half the time.

    • Re:Commission (Score:4, Informative)

      by dj245 ( 732906 ) on Tuesday January 20, 2015 @04:36PM (#48859537) Homepage

      So commissions are $50/$481 = about 10%. In other words, a fairly minor factor; you can usually save that by switching companies. Sure, it would be nice to chop 10% off your bill; but that is hardly a "major disruption". Even a caveman can chop 15% off your bill; who needs technology?

      Most major carriers are moving towards online services already. If Google enters the market, their efforts can quickly be matched, leaving no net advantage for Google.

      The bigger savings will be by more accurately calculating the risk. Insurance rates (should be) based on the risk. The more accurately the risk can be calculated on an individual basis, the less tolerance needs to be added to account for an incorrect calculation. And with big data, more information = more accurate predictions in general. Insurance companies have access to a large amount of data, but Google probably has bigger datasets. I am also sure there are a great many insurance companies which are lazy and not calculating the risk as accurately as might be possible.

    • It's not just commissions. If you can automate away the process you can eliminate a shit ton of people, too, and that's where the costs are. I'll bet a lot of those commissions are in commercial insurance policies and those kinds of policies will still probably be sold by sales people who earn a commission.

      Part of me is like, yay, insurance is expensive and it would be nice to pay less for it, and why shouldn't you in theory be able to just find policies via the web?

      But part of me is like, ugh, every time

      • In the UK, the vast majority of insurance policies are sold through web-based comparison services, and Google is by no means the only one, or anything like the most popular one.

        We have for example comparethemarket.com , gocompare.com , moneysupermarket.com , uswitch.com , moneyfacts.co.uk and loads more of them.

    • by tlhIngan ( 30335 )

      If Google enters the market, their efforts can quickly be matched, leaving no net advantage for Google.

      Except being able to factor in your entire history into their actuarial tables.

      I mean, if you're into car racing and participate in amateur racing events arranged via forums, then Google can take that into account because they know you visit those sites with regular frequency, and thus may by driving your car in ways a "regular" driver might not (even if it was on the track).

      Or perhaps Google sees your chi

  • We would save a lot of money if a retirement account could be used as evidence of self-insurance in place of paying an insurance company.

    • You can do that, if you're willing to lose everything when your momentary lapse of attention results in (or is claimed to result in) serious injury.

      Aide form the whole "I don't want to lose everything I've saved", having at least collision insurance means that you don't have to fight with the other person's insurance company, and that has value. No matter who is at fault, you're not going to have to pay, so the other insurance company can't try to bully you or ignore your claim. Instead, your insurance co

      • by Ichijo ( 607641 )

        In California, the minimum liability requirement [ca.gov] is:

        • $15,000 for injury/death to one person.
        • $30,000 for injury/death to more than one person.
        • $5,000 for damage to property.

        So all you need is $35,000 in a separate account to fulfill the worst case.

        I could take out a $35,000 surety bond, but that money would do more work for me if it were invested in a nice index fund.

    • An insurance company can cover the eight figure payout to the 6 year old kid you ran over and left with life long and life altering problems. Can your retirement account cover that?

      That's why insurance is a big thing - you can probably cover a couple of hundred thousand dollars if you really need to, but its when you can't cover it that having a big backer counts.

      • Or, you can be under insured, get involved in a hit and run, and suffer because there is nobody to pay the claim.

      • Can your retirement account cover that?

        Most people's insurance plans can also not cover an 8 figure payout. People shop on premium cost alone.. Most have not much more then state minimums. When I was young and had no assets I only carried 40K of liability insurance. Connecticut state min is 20K.

        At 20K even totaling out a mid-range compact car will max out that coverage. That's why we have "uninsured/under insured" coverage now. So when some 20 y/o driver with 25K of insurance totals my 60K car and puts me in the hospital my insurance picks up th

        • Wow, the US really does get worse each time something comes up :/

          In the UK, third party costs are unlimited - you might not get your car repaired but the person you hit will see their life altering injury costs covered for as long as they need them.

          • Hey now, don't rub your civilized way of taking care of the sick and injured in my face. If my face gets hurt, you know how much it will cost me to get it fixed!

          • In the UK, third party costs are unlimited - you might not get your car repaired but the person you hit will see their life altering injury costs covered for as long as they need them.

            Yeah, but what does that do for me getting a car back, something required for me to live and work in the US?

            Getting my car back or replaced is the main thing I"m concerned with after a wreck (assuming that "I" am not injured).

            • In the UK you have a choice - fully comprehensive insurance, which covers everything including replacing your own vehicle, or third party only (well, you can add fire and theft cover) which only covers the costs of any third parties you hit.

              The choice of level of cover, plus additions such as legal cover (covers your legal costs should you be sued) which are the voluntary aspect of your premiums total, the other being your risk component.

              But at all levels, third party costs are completely covered no matter

            • You get fully comprehensive insurance rather than third party insurance. Bizarrely, it is often actually cheaper to get fully comprehensive cover, and even when it does cost more, it is usually only a few pounds more.

        • And, one should point out that your retirement account, unless used for silly things (like to avoid paying insurance) should not be counted as part of your assets for liability purposes.

      • by dj245 ( 732906 )

        An insurance company can cover the eight figure payout to the 6 year old kid you ran over and left with life long and life altering problems. Can your retirement account cover that?

        That's why insurance is a big thing - you can probably cover a couple of hundred thousand dollars if you really need to, but its when you can't cover it that having a big backer counts.

        I see market potential for a hybrid auto insurance plan. The little accidents could be handled by a sort of trust account of $10k or so. Combine that with liability insurance with a $10k deductible and an insurer could offer *very* low rates. Maybe if the insurer was collecting the interest/dividends on the trust account, it is possible they wouldn't need to charge rates at all.

    • by jfengel ( 409917 )

      I'm not sure how many people would be helped by that. You'd probably need to guarantee at least half a million dollars in your retirement account; even those who take their retirement seriously (a depressingly small fraction, according to polls) don't get that until well advanced in their careers.

      And those who take their retirement seriously should not be risking their entire retirement account on this risk. There's a decent chance that if they're in an accident, they too will need medical care and lose wor

      • You'd probably need to guarantee at least half a million dollars in your retirement account;

        $55,000 in Texas
        http://www.dmv.org/tx-texas/ca... [dmv.org]

        It doesn't say how you get it back - I assume you never do until you either start paying an insurance company or stop driving.

        It would take me many decades to hit $55,000 in insurance fees so this really isn't a worthwhile option for me.

    • We would save a lot of money if a retirement account could be used as evidence of self-insurance in place of paying an insurance company.

      You can self insure if you put up a bond of $X. I think 10,000 is a common number in US states. The thing is, you cannot be the one investing it. So when you're distracted because your portfolio takes a nose-dive and you crash into someone, that 10k is still around.

      Of course, you could lose everything, because that's not the maximum liability you face. So you might wan

  • by phorm ( 591458 ) on Tuesday January 20, 2015 @03:07PM (#48858531) Journal

    Getting insurance isn't the problem.
    Getting companies to honor it, is.
    Given how difficult it is to track down support from Google for support on some of their current offerings, I'm not sure insurance will be much of an improvement in customer experience.

  • by PPH ( 736903 ) on Tuesday January 20, 2015 @03:09PM (#48858551)

    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 [wikipedia.org] 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.

    • by DarkOx ( 621550 )

      With some quiet legislative changes to insurable interest [wikipedia.org] regulations, the likes of Goldman Sachs will soon be shorting your grandfather's life

      Don't hold your breath there have been lots of folks who have tried this business. My ${relative} was a 30 year live insurance industry veteran. ${gender pronoun} was hired by a start-up as a expert. They had a full cabal of attorneys and folks to put up the capital on the line. The goal was to essentially establish an exchange or brokerage for other peoples life policies.

      So for example a company takes out a life insurance policy on their CEO. CEO some years later. What generally happens today is the policy is allowed to lapse and the life insurer gets all the profit or the company is forced to continue servicing the policy for an indefinite period so they can eventually collect the benefit or exchange the policy for some cash value in some cases.

      Their idea was you could sell the policy, the liability for paying the premium and the right to be the beneficiary. This way the policy could be sold for its net present value, rather than simply surrendered for its usually lower cash value or allowed to lapse.

      Needless to say many trips to Washington were made and long SEC conversations were held and after several years they were forced to give the whole thing up. Insurable interest regulations were only a part of the problem. There are lots legal hurdles around 'who' is allowed to sell an insurance policy. The SEC was less than excited about a part other than the originator or a borker representing them doing it.

    • I once interviewed for a job at a company that buys unwanted life insurance policies. It is called the "secondary life insurance market". I have no idea how they get past the rules that the person who buys life insurance is supposed to have an interest in the person insured.
  • Please do health insurance Google! Blue Cross sucks! They need the rug pulled out from under them.

    If that means I submit my health info to the Big Datas...so be it. So long as it helps to drive healthcare costs down.

    • Blue Cross does suck from my experience, but I don't think they are the primary culprit behind the high cost of health care. See, the PPACA regulates health insurance, but it does very little about the cost of the health care that the insurance must pay for.

      Let me give you two good examples that show how fucked up our health care is in this country. I believe that most doctors are honest, hard-working people, but there are some really sleazy douchebags in the industry.

      Example 1: Look up how much it co

    • ... at least in most states.

      I grew up in Michigan. We had GREAT health care at little cost, thanks to the auto industry, and the non-profit Blue Cross organization that they used for insurance. Even if you did not work in the auto industry, everybody in Detroit had Blue Cross "cadillac coverage" at reasonable cost.

      But they sold-out (metaphorically) and licensed their name to greedy, profit-making enterprises. In California, we have Anthem Blue Cross, a profit-making corporation, and about the worst anti-con

  • I called my mail order pharmacy today to deal with two separate issues:

    1)My prescription had not arrived. When I asked why, they said my insurance company told them my service was 'term" as in terminated. I have no idea why the customer service person felt it was important to tell me the status code for terminated was "term", but she did. But I wasn't terminated. Had to call up the insurance company and get them to tell the pharmacy division (same company, but they can't talk to each other) that I

  • It seems like they can only lose if there is a big spike in claims, such as a natural disaster or possibly war/terrorism. And in those events, when a big spike in claims occurs, doesn't the government insure the insurance company with disaster relief?

    The smaller "pinprick" losses are from individual fraud claims. You'd have to sign an insurance contract that gives Google investigation rights (just as you do a conventional insurance company) and what Google could do with those rights during a claim inve

  • In my younger, more vulnerable, far more gullible years, some representatives at Primerica asked me to sign up with them. They told me it would be a great Summer job in between college semesters and that I'd learn a lot.

    Learn a lot I did.

    They did pay for me to go to to state-required classes to become a licensed insurance salesperson. They were right, I did learn a lot about insurance there. The theory, how it works, lots of legal stuff and ethics, etc., etc. I was happy about that. It's good stuff to know.

    • My friend interviewed at a pretty major insurance company. It was a similar setup.

      My guess is it's their variant of a partnership in a lawfirm or somesuch. Up or out!

  • Elon too thought the auto sales model is ready for a disruption. The auto insurance agents form a powerful coalition. They make good living on the commissions. Will not be easy to break into their cartel. The regulatory framework is fragmented, state by state. State insurance commissioners are either appointed or elected in very low profile elections. They are easy to be lobbied by these insurance agents, they will run circles around google. Commissions on 450 billion dollar premium collection will be be given up easily without a fight.

    It will not be as easy as breaking up the travel agents business using the net by buying the ITA software or something like that.

    • At the end of the day, I think Google wants the information about people's driving destinations, habits, etc. People will offer this to Google for discount car insurance. Google will use it to sell more appropriate ads and make more money. They will get this data as well with their automated cars, but it will be awhile before everyone is driving one.

  • With insurance, you don't really know for sure how good it is until the day you hope never comes happens, and you have to make a claim. Do they drag their feet or low-ball payment of the claim? Do they drop you? Do they hike up your rate?

    My car insurance is kind of on the middle-low end of cost. I get ads for other insurance that could have cheaper premiums. But... With my current insurer, I have had a few experiences with having minor and not-so-minor claims, and they have treated me well, and not dro

  • Way to follow the heard Google....FYI it's also nice to know that you see no value in people, "they still use human agents"

    Morons.
  • It sounds like the services described in the summary are still insurance agencies, just with lower (and less visible) costs and more technological awareness:

    Some [of these] companies, like CoverHound and PolicyGenius, are online insurance agencies. Others, like Comparenow, send traffic to insurers and get a finder’s fee whenever someone buys a policy.

    Now, that's fine as far as it goes; traditional insurance agents are an unnecessary, costly, and often unsavory gatekeeper if you're just looking to buy a vanilla personal insurance policy. If Google et al. can finally get people to cut out traditional agents, that's great - banging on about the evils of old-fashioned financial gatekeepers like stockbr

  • It's a trap! (Score:5, Insightful)

    by damn_registrars ( 1103043 ) <damn.registrars@gmail.com> on Tuesday January 20, 2015 @04:05PM (#48859243) Homepage Journal
    Seriously Google, don't mess with the insurance industry. Don't mess with any part of it. They will make you pay. Look at what happened in 2010; we thought we were going to finally get a single-payer option for Americans and instead the federal government handed out the largest corporate handout in the history of government to the health insurance industry.

    If Google tries to disrupt the insurance industry we soon will have no Google.
  • Every time you send a text while driving they up your rates.
  • Google has been wandering too far out from its experience. Space satellites are another head-scratcher project of theirs. The history of big oligopolies wandering off target is not very good. GM used to do that also, and ended up selling off most of their experiments at a loss. And while Xerox did great research outside of copiers (GUI's, Ethernet, etc.), they didn't know how to bring it to market, making bulky, expensive copier-like machines.

    I would like to see Google be more aggressive going after the ca

  • This cool. Very cool. A solution that cuts out a largely unnecessary part of the process (agents) and it's expense is long overdue.
    Still, there's an industry that I'd like to see "disrupted" even more - undertaking. Any business whose primary product is "...the last thing you'll ever be able to do for your late loved one..." deserves, more than any other, to be disrupted.
  • This is privacy advocates' worst nightmare. Okay, nazi-style mass murder of people with certain thoughts and opinions enabled by the scarlet letter that is all the data Google keeps on all of us is privacy advocates' worst nightmare. But this is how it starts.

    When Google eliminates the middle men, do you think prices go down? Only for some, and then only for a very short while until the competition is out of business. And this process is accelerated by high rates for high risk individuals. High risk for pay

  • Can they send a drone with a customer-service or sales rep?

    Because, for medical insurance today, you can reach nobody for either of these by phone, nor have an email or voice-mail replied-to either. You would think they would be at least somewhat interested in at least sales calls, but apparently they are so awash in profit that it just doesn't matter to them.

    Companies used to have walk-in offices where you could camp-out if necessary.

    I finally found a locally-based non-profit health plan where I was able t

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