Sharing economy platforms such as Airbnb and Uber have opened up new opportunities for service delivery and new risks.
The challenge for insurance is now up for grabs: insurance products for the sharing economy will require insurers to transform their business processes, operations and communication via a different value chain policy.
Ian Campos – Executive Vice President within Capgemin’s Global Business Unit of Global Financial Services and head of the Global Insurance Services team – thinks so, and here is the original text in English.
The sharing economy opens up new opportunities, but also a set of risks that insurance policies do not cover yet. For example, most insurance policies for homeowners, tenants or private vehicles generally do not cover regular commercial activities, such as rental of the home or use of private vehicles by third parties. Traditional policies offer limited cover, which may not be sufficient nor fast enough in the way of underwriting.
Not surprisingly, have new insurance operators been created to bridge the gap and provide better coverage for sharing economy services. An outstanding example is Slice, New York, which offers homeowners in 20 states an on-demand insurance solution for their properties for rent on peer-to-peer (P2P) platforms. Recently, Slice started testing its pay-per-use product for private drivers in services such as Uber and Lyft. UK-based SafeShare has developed a blockchain-based insurance product designed for sharing platforms. It has collaborated with Vrumi, a startup for P2P office exchange. Together provide coverage for owners facing losses due to damage and theft by tenants.
Ian Campos points out that there are key factors to address the challenges of the sharing economy, first of all the use of new technologies that allow, on the one hand to quickly meet the evolution of new services, and on the other hand to properly calibrate elements such as the prices of insurance products that must align with a sharing platform offering low-cost services.
The increasing availability of detailed user data combined with the adoption of technologies such as IoT, advanced analysis, machine learning, etc., makes it possible to achieve a high level of user satisfaction. It will allow economy sharing platforms to offer insurance products better targeted and priced for their users.
P2P platforms increasingly work in partnership with traditional companies. For example, Airbnb has partnered with Lloyd’s of London to provide a ‘Host Insurance Protection’ policy to protect Airbnb owners.
Partnerships between P2P and Companies can be very successful if a seamless user experience is guaranteed. Customers, particularly Millennials using sharing economy platforms, crave a digital touchpoint experience enabling convenient, snapshot transactions across multiple channels and devices. Sharing platforms typically use scalable technologies, such as cloud computing, and are digitally in tune with platform users. Traditional insurers, on the other hand, rely on legacy systems that rarely match the speed, suppleness and adaptability required by a digital enterprise.
Companies are therefore required to make an effort towards ‘digital transformation’, though according to Campos it’s worth it, because there is a huge business opportunity by developing specific products for the sharing economy, through verticals such as sharing travel, sharing space at home and office and workforce on demand.
However, success and influence of these services is inevitably linked to how technologies will be used to completely renew risk management and operating procedures.
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