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How do you insure in the sharing economy?

How do you insure in the sharing economy? | Insurance Business UK

How do you insure in the sharing economy?
Insurers need to keep pace with the trends driving the sharing economy, says major telematics firm Octo, which launches a car-sharing platform today.

Forecasts suggest the car-sharing market could be worth $10 billion by 2025, with the ride-sharing market set to soar to almost $25 billion – all part of a macro trend for the ‘me economy’ that insurers need to stay on top of, says Octo’s chief marketing officer, Jonathan Hewett.

“Increasingly, whether its car-sharing or ride-sharing, people will start to think about pay-per-trip, pay-per-use type models, and insurers are going to need to be able to embrace that consumer demand,” Hewett told Insurance Business.

“Insurers, as risk-based organisations, need to understand these trends, and being very risk-orientated what they want is information – and that information and the insights come from the data, which is where these things start to come together,” he went on to say.
Today, Octo subsidiary Omoove launches a new web-based platform that will allow individuals and companies to build their own local car and ride-sharing communities, acting as community managers. The managers will then be able to offer their members vehicles for hire, the opportunity to share their cars, as well as the chance to share rides with each other.

The high cost of vehicle ownership is helping to fuel the growth of peer-to-peer transportation: in the UK, it’s the biggest sector of the sharing economy based on revenues.

“It means that this area has huge cost-saving potential for car owners,” Edwin Colella, chief sales and marketing officer of Omoove, said. “Technology means ride and car-sharing is increasingly accessible to everyone, and Sharemine provides a simple-to-use way for everyone to be part of their community, while also doing their part for the environment.”

While the sharing economy and the demand for usage-based models has boomed, it’s an area that can complicate traditional insurance models, and has left many players scratching their heads.

“We see high demand from our existing insurance companies to understand how this sharing economy is going to impact their business,” Hewett said of the more than 100 insurers that Octo now works with.

“Insurers are keen to understand, particularly in the telematics sense, the types of data and analytics, and the trips that users may be making with a telematics-enabled vehicle,” he explained.

“With all cars becoming connected, and with the ability to connect every single car with an after-market telematics device, it provides much more insight to the insurer or indeed to the community. If I borrow your car, when I give it back to you we will both know how I’ve driven it, and whether I’ve had any accidents or collisions. It makes it a very transparent relationship, which I think is very important in the sharing economy gaining traction.”

Related stories:
Octo Telematics acquires Willis Towers Watson’s telematics division
Ride-sharing insurance: an untapped market?