The rise of the E-scooter and micro-mobility insurance

The rise of the E-scooter and micro-mobility insurance | Insurance Business

The rise of the E-scooter and micro-mobility insurance

The electric scooter (E-scooter) is one of the fastest growing urban mobility trends. They’re cheap, they’re easily unlocked with a smartphone app, and they’re widely available in more than 100 cities worldwide. A study by the Boston Consulting Group (BCG) estimates the global E-scooter market to reach up to US$50 billion by 2025, with approximately 50% of usage stemming from Europe and the USA. When describing the growth of the E-scooter, BCG stated: “If market growth were vehicle acceleration, the humble electric scooter—the latest answer to urban mobility—would be a Ferrari.”

With such an explosion onto the micro-mobility scene, it has been hard for cities, regulators and insurers to keep up. As e-scooters multiply, cities are under enormous amounts of pressure to work out traffic laws, driver etiquette, public safety, docking rules, street permits, and liability issues. We’ve all seen the news reports about crashes with pedestrians, road traffic accidents, and even deaths involving e-scooter incidents. They pose a challenge that many stakeholders are yet to wrap their heads around.

The rise of the E-scooter
In May 2019, global reinsurer Swiss Re published a report entitled, ‘Mobility ecosystems: striving towards a seamless interface for customers’. In this report, Corinne Fitzgerald, a researcher at the Swiss Re Institute, made the link between urbanization and mobility. She stated: “Cities are covering bigger geographical areas – known as urban sprawl – and are increasingly cosmopolitan; people are moving from rural to urban areas at a rate that is leading to almost a complete reverse in population spatial distribution and with migration, the cities that they are moving to are not always the closest to them geographically. New technology means that there are new types of transport; electric cars and trains, ride sharing platforms, and a willingness to economize means multi-modal journeys are becoming increasingly common.”

With urbanization, there’s also thought to be an increase in traffic congestion, which consequently results in additional carbon emissions – something that many companies around the world are looking to reduce. Micro-mobility solutions, like the E-scooter, could reduce the amount of congestion on city roads and therefore make a mark on global carbon emissions footprint. This makes the E-scooter attractive and explains its proliferation in recent years.

Insurance for E-scooters
For insurance companies to stay relevant, they have to understand people, their preferences and their behavior. Essentially, they need to work with good data. And the good news is, that data is readily available. As Dan Heitlinger, financial analyst at A.M. Best pointed out recently at the firm’s Canadian Insurance Market Briefing in Toronto, micro-mobility networks only exist because of new technologies, like GPS locators and telematics tools. He said: “It’s these technologies that allow insurers to more easily understand the driving habits and risk profiles of the consumer base or of a particular rider in real-time. Ultimately, this makes underwriting the risk viable.”

However, while the risk is “viable,” there’s still a lot of confusion around which insurance policies will pick up an E-scooter liability claim. If a rider has personal /private health insurance, they will likely get some coverage in the case of an accident. But if an E-scooter rider causes an injury to a pedestrian, damages a person’s property, or causes a road accident, coverage is much less clear – and often non-existent.

The two biggest names in E-scooter sharing – Bird and Lime – both offer limited liability insurance. However, they also make riders sign rental agreements that essentially strip them of all liability, meaning customers must accept responsibility for accidents before scooting off. In the case of a claim, customers might try to fall back upon their home liability or their rental liability insurance, but most policies will exclude incidents involving motorized scooters or bikes. Therefore, a rider’s best bet for coverage is probably umbrella liability insurance on top of a home or auto policy. That’s a lot of things to think about before hopping onto an E-Scooter for a quick five-minute whizz across the city.

‘It’s like the Wild West’
July 2019 saw the first fatal collision involving an E-scooter in Britain. TV presenter and YouTube star, Emily Hartridge, died on Friday, July 12, when her E-scooter collided with a lorry at a roundabout in Battersea, south-west London. The tragic incident caused a wave of concern about the safety of E-scooters and their use on public highways.

British transport minister at the time of the incident, Michael Ellis, told The Guardian: “Micro-mobility products are appearing in countries across the globe and are an exciting innovation for which we know there is demand. However, safety must always be our top priority when considering their use on public highways in this country. The government is considering this as part of its regulatory review, as announced in March in the [policy paper] Future of Mobility: Urban Strategy. We are examining whether they can be used safely on the road – and if so, how that should be regulated to ensure the public’s safety. However, companies must understand that reviewing laws does not necessarily mean laws will change.”

As Heitlinger commented: “With the exponential growth of E-scooters, regulators have really struggled to get their hands around the issues. E-scooters have popped up out of nowhere, and at times, they can be a serious hazard. Right now, it’s a bit of a Wild West out there. People are able to hop on and hop off on a whim, driving on the road and occasionally on sidewalks, reaching speeds of up to 50km an hour, and then docking wherever.”

The laws surrounding E-scooters
Laws around the world are still catching up with the E-Scooter phenomenon. Here’s a summary of the legal climate around the world:

- USA: According to the National Highway Traffic Safety Administration (NHTSA), “scooters lacking seats that are operated in a stand-up mode” don’t qualify as motor vehicles, which means they aren’t legislated at a national level. Therefore it falls to the individual states and city authorities to regulate E-scooters. Many cities, including New York and LA are in a pilot phase.

- Canada: Again, E-scooters laws vary by province. They remain illegal on the roads in most cities, apart from in Calgary and Quebec where strict pilot programs are under way.

- UK: E-scooters are illegal on both roads and pavements in the United Kingdom, and change does not seem likely in the near future, considering the tragic death of Emily Hartridge.

- Asia: In Japan, regulators have recently classed all E-scooters capable of speeds over 9kph as a motor vehicle, thus making it a legal mandate for all riders to obtain a license, registration, and everything else drivers would need to ride a moped or a motorbike. However, other countries in the region are less advanced. In India, for example, E-scooters are legal to ride without tax and insurance as long as their motors are under 250W and their maximum speed is no higher than 25kmph.

- Australasia: Australia’s stance towards E-scooters varies from state to state. Some states like Queensland and New South Wales are very restrictive, whereas the city of Brisbane and the state of Victoria are a little more permissive. In New Zealand, E-scooters are allowed on footpaths or roads, but not in designated cycle lanes. They’re only allowed to have a maximum power output of 300W.

Helpful tips for safe scooting
After receiving 2,432 injury claims for E-scooter related injuries costing a total of NZ$1,458,133 between the launch of rentable e-scooters in Wellington, NZ, from October 2018 to May 2019, New Zealand insurer, the Accident Compensation Corporation (ACC) released the following tips for insurance brokers to pass onto clients:

  • Share the space: Respect the people around you by allowing space when passing, and if on the road, follow the road rules;
  • Wear a helmet: It should fit nice and snug, and have two fingers of space from your eyebrows. If you do fall off and have a serious knock to the body or head, see a doctor;
  • Start off slow: If you’ve never ridden a scooter before, get a feel for it first and find your balance before you go racing off down the waterfront;
  • Have fun: most of all, enjoy being out and about, and trying something new.

They sound simple, but perhaps an awareness and education campaign around the risks of E-scooters is a good place to start as countries struggle to wrap their heads around the micro-mobility trend.