A report in the Financial Standard has highlighted the latest competitive threat that could potentially be awaiting QBE Insurance Group Ltd (ASX: QBE) and Insurance Australia Group Ltd (ASX: IAG).
According to the report, internet giant Google Inc. is believed to be eyeing off an entry into the insurance market. Google has already established a foothold in the insurance comparator space in the UK where it offers a similar service to what iSelect Ltd (ASX: ISU) offers to Australian consumers.
While Google's 'Compare' site is still in its infancy in term of both US and global roll-outs, there is one thing which is almost certain – when Google finally "arrives" it will have a dramatic effect on many leading comparator sites, as well as brokers, agents and businesses across a range of industries.
Why insurers?
According to research by TechCrunch, insurance (specifically automotive) is forecast to be one of the web's top five sales products in 2015. It appears that Google isn't looking to just be an enabler here but rather the tech giant is looking to carve out its own slice of the pie by applying for insurance licenses in a number of US states.
Given the commodity nature of insurance products, anything which is easily replicated and can benefit from branding could be appealing to Google. It's not hard to imagine the group becoming a major direct player in property and life insurance. It could also utilise its systems to be a major broker of more complex insurance lines.
Not just insurers who need to be worried
Perhaps the biggest worry of all is that it's not just the insurance sector which could be in for disruption from Google. Classifieds businesses including employment, cars and real estate could also find themselves under attack from a cashed-up player with deep pockets and a strong brand. Shareholders in Freelancer Ltd (ASX: FLN), SEEK Limited (ASX: SEK), REA Group Limited (ASX: REA) and Carsales.Com Ltd (ASX: CRZ) should take note as while the insurance sector might be the first in line for disruption, it's unlikely to be the last!
