In a shared economy, who should bear the risks that come with it?

The shared economy has been growing for a number of years and it’s only likely to dominate going forward. As technology’s role in the shared economy continues to expand, individuals have grown accustomed to the numerous benefits that come with it — convenience, flexibility and cheaper costs, among others.

But the shared economy also comes with a number of risks, and figuring out who is responsible is a critical question for any party involved. To answer such a vast question, Lloyd’s commissioned a survey conducted by research agency Coleman Parkes to learn more about how all parties involved in the shared economy perceive and manage the risks inherent in the sharing economy model around the world.

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Mapping out the benefits and risks

Among the 5,000 individuals surveyed across the U.S., U.K. and China, clear regional differences emerge between the three countries.

For 58% of consumers in the U.K. and U.S., the risks outweigh the benefits of using the services. Chinese consumers are more positive with 68% perceiving greater benefits than risks. There were mixed reviews on whether the shared platform or provider should provide protection for the consumer; there were similarly mixed views on who should provide protection for the provider.

While there is no consensus regarding who is responsible, 53% of representatives indicated that consumers should provide insurance for themselves in the event something goes wrong.

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Traditional insurance might not work

Some of the risks sharing economy companies are not dissimilar from those of their traditional counterparts — property damage, business interruption and cyber attacks, among others. Insurers have long provided insurance solutions for ‘tangible’ physical assets, but assets in the shared economy are often intangible, such as intellectual property, trust and reputation.

The sharing economy model requires a different approach to risk management based on understanding the behavioral economics of consumer preferences and attitudes during risk.

Lloyd’s found that 71% of consumers globally would be more likely to use sharing economy services if insurance was offered; 70% also noted they would be more likely to consider sharing or offering a service if insurance was offered.

While the number of services and assets are sure to increase, the sharing economy has a long way to go before the benefits outweigh the risks in the eyes of most. Its will remain contingent on the confidence that consumers and providers have in the market, and how the insurance industry prepares to adapt.

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