The future of insurance & the sharing economy

Companies such as Uber, Instacart and Airbnb have radically altered the way consumers view certain industries. These emerging and ever-evolving businesses also present unique insurance needs, demanding flexibility from the industry.

Noting the huge opportunity these businesses present insurers, Laura Langone, head of insurance for Airbnb, said: “The sharing economy isn’t going away, and it is evolving. We saw it with Uber, and we have seen it with home-sharing and a lot of other goods and services.”

The needs of companies that comprise the sharing economy are each unique. This makes finding coverage a bit more difficult than simply going to the market and picking up a pre-existing product, according to Langone.

With this in mind, Chris Moore, head of ibott and deputy active underwriter 1971 at Apollo Syndicate Management Ltd., said the long-term view is that of a continually evolving insurance product.

“We have to transition from that transactional relationship where we meet every 12 months to renew a policy,” he said during a RIMS LIVE 2021 event. “We need to be regularly talking about our risks and regularly talking about our data.”

Looking toward the future of policies for sharing-economy businesses, Langone explained it is important to have the following three pillars in mind:

Building blocks for future insurance products

1. Product: Building a product is a unique proposition that requires understanding the business as well as the design and manuscripting. All of these facets need to be supported by data as well.

“It isn’t just pie in the sky. The market won’t give you everything you need,” Langone said. “The sharing economy looks different than typical corporate risk. You are building your claims tools and your data actuarial. You have to be dynamic and partner internally or with a TPA to get at the heart of the information.”

2. Program: Aiming to offer its hosts coverage, Airbnb knew it was a risk not many insurers would be willing to embrace. Langone said the company’s goal became to create a marketplace. This required partnering and educating the industry on the unique risk the vacation-rental business faced.

For Airbnb, finding a solution meant setting up its own agency and a captive plan. However, Langone noted this is perhaps not the end goal for the company nor the sharing economy.

“We also want the marketplace to evolve, so it can cover hosts and guests on its own. We want the market to be solutioning for this, so we don’t have to do it ourselves,” she said.

3. Compliance: While not every emerging business model is attracting government oversight, for those with true scalability, the specter of regulations is one certain to appear.

“You can’t be in all of the markets we are in, and you can’t be in hybrid industries without thinking about compliance issues,” Longone said. “Maybe they aren’t there yet, but companies are going to have those hurdles along the way that they have to be looking for.”

In order to do this, she said understanding how the business operates and where it is evolving is critical. With these factors in mind, programs should then have built-in flexibility to adapt to changing regulatory landscapes.

Related:

• Gig economy workers need these three insurance policies
• Mobility tech is speeding up as insurance companies lag behind
• How logical data fabrics can keep insurers covered