Insurers have 'some way to go' to adapt to sharing economy
Insurance companies that fail to adapt to the sharing economy risk missing out on a big growth market, says a new GlobalData report.
In recent years, companies like Uber, Airbnb, and Postmates have changed how society operates in more ways than one. Beyond providing new means of employment, the sharing economy has also presented new, unique risks to individuals and businesses. Insurers now must innovate and adapt products to the quickly evolving sharing economy — and if they succeed, it can be a business game-changer.
But as it stands now, coverage gaps still exist in the insurance market for the rapidly-growing sharing economy, says GlobalData.
‘Sharing Economy in Insurance – Thematic Research,’ a new report from the data and analytics company, says that while home-sharing and shared-mobility offers are its best-known forms, the sharing economy has presence across other categories, positioning it for immense growth in the coming years.
“Companies such as Airbnb and Uber have largely revolutionized the hospitality and transportation industries, but their quick growth has posed challenges to insurance,” Beatriz Benito, senior insurance analyst at GlobalData, said in a statement. “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.”
A few insurers, such as AXA, Allstate and Zurich, have modified products to fit sharing economy risk. InsurTechs have also tapped into the market by offering solutions for common insurance coverage gaps.
According to Benito, some add-on solutions exist in the market as well as ride-sharing endorsements that a driver can add to their insurance policy. Additionally, some companies now offer on-demand solutions that allow for insurance coverage to be switched on or off as needed. Nevertheless, Benito stresses that ambiguity surrounding the level of coverage and when coverage starts continues to exist. “While legislation is bringing some clarity into this,” she said, “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 continue encouraging the industry.”
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