The growth of the sharing economy, a system in which assets or services are shared between private individuals, has been relentless, and it has shaken up the way the insurance industry has traditionally understood liabilities. The sharing economy has pressurized insurers to innovate and quickly adapt their products. But gaps in coverage still exist, while the sharing economy continues to grow strongly, says GlobalData, a leading data and analytics company.
According to GlobalData’s report, ‘Sharing Economy in Insurance – Thematic Research’, the sharing economy has particularly taken off in home-sharing and shared-mobility models – although it is present across numerous other categories. It has resulted in a wave of flexible and innovative insurance products, and has forced insurers to adopt new delivery methods to provide the fast transactions that the customers of today require.
Beatriz Benito, Senior Insurance Analyst at GlobalData, said: “Companies such as Airbnb and Uber have largely revolutionized the hospitality and transportation industries but their quick growth has posed challenges to insurance. Typically, the industry had distinguished between personal and commercial products, but the sharing economy blurs the lines. Marketplace platforms are enabling consumers to share their belongings or services for commercial activities.”
The global insurance industry reached $6.2 trillion in premiums in 2018 but insurers that do not adapt to emerging models in the sharing economy risk losing part of their share. Some insurance firms have started adapting their products to better match the requirements of customers taking part in the sharing economy. Companies such as AXA, Allstate and Zurich are among those that have developed products for the sharing economy to a greater or lesser extent. At the same time, insurtech startups such as Metromile or Pikl have also played their role in narrowing the gap in insurance coverage. Partnerships between insurers, insurtechs and/or marketplace platforms are enabling insurance cover to start when customers enter sharing economy activities, minimizing any delays or friction.
Benito continued: “Some insurers have responded by creating add-on solutions to complement existing policies. For instance, several insurers now offer ride-sharing endorsements that can be added on to the driver’s personal policy. That way a driver using their vehicle for commercial undertakings on an occasional basis through the likes of Uber and Lyft can be covered, avoiding the larger premiums associated with commercial policies. Others have developed stand-alone, on-demand products that can be switched on and off as required from an app
“However, there is still ambiguity surrounding the level of coverage, including questions as to when the coverage actually starts. While legislation is bringing some clarity into this, there is still some way to go.
“Consumers are bound to continue using sharing economy platforms, incentivized by greater accessibility and more attractive prices. This signals that there will be new opportunities for insurers in other emerging models, for instance the sharing of e-scooters as a transportation method is gaining traction in several countries. Insurers will be required to develop their products but the rapid success that the sharing economy has had so far should will continue encouraging the industry.”
SHARING ECONOMY GROWTH IN THE UK:
e-scooters
As the UK government seems keen to allow the road use of e-scooters, there is a big opportunity for brokers and insurers to offer PAYG cover for users. At the moment there is still a consultation exercise to go through, but it looks likely that e-scooters will be road legal later in the year. For insurers, the big risks associated are PI and loss of earnings claims, due to riders – mostly inexperienced – suffering collisions at 20mph with road furniture, other vehicles or pedestrians.
Parking/Charging
Two things are guaranteed to annoy drivers in Britain; paying to park and secondly, paying to park somewhere dodgy where damage or attempted theft is likely. The solution for many holidaymakers and those on business trips is often using Park On My Drive to find a safer space.
IE mag can see `Park n Charge’ websites taking off when EV charging kits become affordable, as many a homeowner will be keen to hire out their charging point, alongside the parking facility they have on their driveway. Your driveway earns you extra money whilst at work – what’s not to like?
For insurers, the risks are testing and type approval of charging equipment, safety on the drivewway for all users – passengers or children tripping over cables for example – and interruption of supply at the location, resulting in someone who has prepaid not getting the charge they wanted, through no fault of the vendor.
Refurbish, Re-Use, Recycle
There will be tremendous pressure from climate change activists to make consumers recycle electronic goods, clothing, plastic products etc. over the next decade. This will spark a growth in repair and refurbishment services, which is brilliant for the planet. However, those tradespeople, or keen amatuers, need insurance as faulty washing machines, computers or fridges could cause a fire. Again, it’s all about verifying repairer experience & qualifications, replacement parts ID/sources, industry compliance and more, to make sure refurbished goods are fit for purpose.
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