Google continues to ambitiously expand its capabilities in andbeyond the digital and mobile realms, creating an environment thatpresents new opportunities and challenges for insurers, accordingto a Strategy Meets Action research brief.

The SMA brief, “Google and Insurance: Far ReachingImplications,” authored by SMA Partner Denise Garth, notes that inthe insurance world Google acquired a UK auto-insurance aggregatorand launched its own comparison site shortly thereafter.

While it might be more difficult for Google to launch acomparable aggregation site in the U.S. due to regulatory andbusiness-model challenges, SMA notes that these moves highlight astrategic focus on the insurance industry by companies like Googlethat have traditionally been viewed as insurance-industryoutsiders.

Beyond its direct involvement in the insurance business, SMAsays other products developed and contemplated by Google couldsignificantly influence the insurance industry and the risks itprotects. Google, for example, pioneered the driverless car, SMAnotes, with automakers now getting involved and adding momentum tothe concept.

Google also announced that optical-health insurer VSP will offersubsidized frames and prescription lenses for Google Glass, andGoogle also said it is developing smart contact lenses that willmonitor diabetics' blood-sugar levels in real time.

Another recent acquisition gives Google the capability to offersmart thermostats and smoke alarms with Wi-Fi connectivity,allowing for the management of heating and cooling homes while alsoproviding data on the habits of the devices' users.

Google's recent efforts, combined with its existing search andmapping capabilities, create “a whole new set of opportunities andchallenges” for insurers, providing vast amounts of data aboutindividuals, their cars and their homes, SMA says.

SMA adds that Google's rapid advances in technology create aparadox where an insurance industry that traditionally changesslowly meets a world that is changing rapidly.

The briefing emphasizes that insurers must transform andinnovate to become early adopters of innovation in order todecrease business risk and ensure competitive advantage.

“No business, regardless of its size, has enough time,resources, money, or relationships to fully capture the potential,”SMA says. “Companies will need to be part of an innovationecosystem that enables ideation and crowdsourcing to share trends,research, ideas and opportunities that can be operationalizeduniquely within their organizations.”

SMA also recommends that insurers look beyond their currentbusiness models based on “historical or point-in-time data to amodel that embraces real-time data that can offer more relevant andcustomized products and services.”

Privacy and security

A potential speed bump on the road to this data revolution:privacy and security concerns. Speaking to PC360, Garth, thebrief's author, weighs these two risks, stating, “I think about thedata breaches that happened with Target and other companies—a lotof this data is very private data, so, in my mind, protection isprobably becoming a bigger issue for consumers and presents amarket opportunity.”

Concerning privacy, Garth says insurers, like others, must finda balance between the value of available data and making sureprivacy is managed at appropriate levels. “In some cases, peopleare willing to give up privacy,” she notes, pointing to a youngergeneration that seems willing to share a lot of information. “It'skind of amazing how much they share,” says Garth. “So in some waysit's a cultural thing that customers and insurance companies canbenefit from.”

She also points out that users of Facebook and othersocial-media sites acknowledge that their data can be used andshared, understanding that anything they post becomes publicinformation.

But if consent is not given for certain data to be sharedpublicly, says Garth, then it brings privacy rights into question.“And I think those privacy rights are trying to catch up in someplaces,” she adds, noting that the European Union is looking atprivacy issues arising from the use of telematics.

Garth points out that when considering what data should be usedfor underwriting or any other process, companies need to capitalizeon the wealth of data in order to innovate new products andservices that can add value to customers.

For example, Garth points to the smart thermostats and smokealarms. Alerting a consumer who is away from home that the furnaceis out means that the issue can be addressed before pipes burst,hence eliminating or decreasing the potential for loss, shesays.

Ultimately, technology will continue to evolve at a rapid pace.Garth concludes in the SMA brief, “Today, many insurers areaccustomed to asking, 'How can technology help run my business?'The insurance leaders of tomorrow will be asking, 'How cantechnology help reshape my business?'”