This month’s news that Google could be actively selling auto insurance in the first quarter of 2015 has another round of industry experts sounding the death knell for independent agents and brokers.
In an interview with the New York Times, Forrester Research insurance analyst Ellen Carney said that new market entrants like Google, Walmart and Overstock.com could easily decrease general need for producers and force those that are left to cater to more specialized markets.
“There are 40,000 agencies in the US, and you could absolutely imagine them shrinking by a quarter,” Carney said, “and the ones that are left will deal with more complicated needs and more affluent customers.”
Though stopping short of predicting an exact decline in the agent workforce, Valen Analytics CEO Dax Craig does admit the entrance of alternative distribution channels threatens the sector. Working with carriers from a technology standpoint, Craig says carriers are anxious to maintain good relationships with their agents, but are also intrigued by new market entrants like Google.
“Carriers value the broker channel, but I think they’re very curious about these new players and what they’ll mean to them,” he said.
The attitude reflects a widespread—though not general—dismissal of Google as a threat to insurers themselves. A survey of US insurance companies conducted by Xchanging reveals that just 30% of insurers believe non-conventional sources pose the biggest competitive threat to their business in the US market.
“What Google is really doing is adding another online channel,” said Sean Allen, vice president of North American sales for Xchanging Insurance Services. “The fact that they’re not underwriting today makes them really just another agency, and the biggest hit will be to companies like Esurance and Progressive.”
As to the effect on agents, Allen believes a “gradual erosion” on the workforce and a shift toward more affluent clients is already in place, regardless of these new market entrants.
“I don’t see it as a huge threat,” he said. “I see it continuing to erode at the same pace, to be quite frank.”
