It may well be illegal across Australia but ride-sharing is now a common practice across the country and around the world.
Uber leads the way here while other apps take a share of the market in other countries, but one thing is for certain; ride-sharing is not going away.
How will insurers and brokers deal with this up-and-coming risk? It may seem like a question for the future but with Uber making a concerted push for Australian customers, it is better to be prepared now than fall behind later.
Catherine Weston, an actuary with Taylor Fry, notes that legality will be the first major hurdle that ride-sharing users and the insurance industry will have to clear.
If ride sharing networks become legal, they will present unique challenges for insurers,” Weston wrote on actuariesmag.com.au.
With Uber in regulatory hot-water both at home and abroad, the company may need to dip into its billion dollars’ worth of funding to truly establish itself as a legal practice.
Weston noted that the intricacies of ride-sharing will prove a challenge for insurers with one specific aspect of technology perhaps the way forward.
“As there are different stages in a ride share trip, specific policy wording will be required. Consideration would need to be given to the various stages, ‘app off’ (private) and ‘app on’ (commercial) with the sub-stages: searching for passengers, matched to passenger, passenger collected/in transit,” Weston writes.
“Perhaps a telematics based system linked to the ride sharing app is the most viable for tracking private vs. commercial use. Telematics also has the ability to log miles, location and time of day, which are all valuable factors in pricing usage based insurance (UBI).
Weston believes that, while challenges do exist for the industry, those involved would be well-served to start sooner rather than later with tailored products to meet a growing need.
“Insurance companies would benefit from considering new products designed specifically for legalised ride-share activities and reconsidering their existing insurance policies and provisions,” Weston writes.
“Technology such as telematics would enable real time data to be collected for pricing usage-based insurance, differentiating between private and commercial use.
“It remains to be seen as to how legislators, regulators, and indeed insurers will handle the rise of ride sharing services like Uber.”