Google continues to ambitiously expand its capabilities in and beyond the digital and mobile spectrum, creating an environment that presents new opportunities and challenges for insurers, according to a Strategy Meets Action research brief.

"Google and Insurance: Far-Reaching Implications," authored by SMA Partner Denise Garth, notes that in the insurance world Google acquired a UK auto insurance aggregator and launched its own comparison site shortly thereafter.

While it might be more difficult for Google to launch a comparable aggregation site in the U.S. due to regulatory and business-model challenges, SMA notes that these moves highlight a strategic focus on the insurance industry by companies like Google that have traditionally been viewed as insurance-industry outsiders.

Beyond its direct involvement in the insurance business, SMA says other products developed and contemplated by Google could significantly influence the insurance industry and the risks it protects. Google, for example, pioneered the driverless car, SMA notes, with automakers now adding momentum to the concept.

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

Another recent acquisition gives the search giant the capability to offer smart thermostats and smoke alarms with Wi-Fi connectivity, allowing for the management of heating and cooling homes while also providing data on the habits of the devices' users.

Google's recent efforts, combined with its existing search and mapping capabilities, create "a whole new set of opportunities and challenges" for insurers, providing vast amounts of data about individuals, their cars and their homes, SMA says.

SMA adds that Google's rapid advances in technology create a paradox where an insurance industry that traditionally changes slowly meets a world that is changing rapidly. The briefing emphasizes that insurers must transform and evolve to become early adopters of innovation, in order to decrease business risk and ensure competitive advantage.

"Companies will need to be part of an innovation ecosystem that enables ideation and crowdsourcing to share trends, research, ideas and opportunities that can be operationalized uniquely within their organizations," SMA says.

SMA also recommends that insurers look beyond their current business models based on "historical or point-in-time data to a model that embraces real-time data that can offer more relevant and customized products and services."

Privacy and security

The potential speed bumps on the road to this revolution in data use: privacy and security concerns.

Speaking to NU, Garth, the brief's author, weighs these two risks, stating, "I think about the data breaches that happened with Target and other companies—a lot of this data is very private data, so, in my mind, protection is probably becoming a bigger issue for consumers and presents a market opportunity."

Concerning privacy, she says, insurers must find a balance between the value of available data and making sure the protection of information is managed at appropriate levels. "In some cases, people are willing to give up privacy," she notes, pointing to a younger generation that seems willing to share a lot of personal data. "It's kind of amazing how much they share. So in some ways, it's a cultural thing that customers and insurance companies can benefit from."

Garth points out that when considering what data should be used for underwriting or any other process, companies need to capitalize on the wealth of data in order to innovate new products and services that can add value to customers.

For example, Garth identifies smart thermostats and smoke alarms. Alerting a consumer who is away from home that the furnace is out means that the issue can be addressed before pipes burst, hence eliminating or decreasing the potential for loss, she says.

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

Special Reports /

The Insurance Implications of Google

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