Powered by high-speed internet connectivity, high mobile penetration rates and a growing preference among millennials, the conveniences of the on-demand economy can no longer be ignored. With an estimated $23 Bn* in venture capital funds being poured into the sharing economy since 2010, the market has gained significant momentum with recorded year-on-year growth of 5%-15%** particularly in the ridesharing and home and room-sharing space.
The sharing or on-demand economy has exploited the sensationalization of the internet to its advantage giving users significant cost and time advantage, fuelling considerable competition to the ‘ownership economy’ and giving manufacturers a lot to think about when designing their future strategy. The sharing economy has penetrated across several sectors of the economy with one single purpose – provide low-cost convenience. Today on-demand applications can help you get a ride home, select your daily designer wardrobe, rent an apartment on your travels and book free conference space during the meetings season.
Millennial preferences driving the sharing economy:
- Renting over ownership
- Low transaction costs
- Use of better quality products
- Access to more money
- Reducing carbon footprint
- Ability to have unique experiences
As demand increases so does the potential for revenue generation. However, as this economy becomes increasingly ‘mainstream’, its short term nature throws a puzzling conundrum to risk management bringing to light several points of consideration:
- How regulated is the marketplace?
- Who holds ultimate liability in case of injury/accident/property damage?
- How is the risk of personal items used for commercial use priced?
- Is there significant loss history available to facilitate pricing?
- Since individuals sign up as service providers on the platform, how are they liable?
- Are exclusive/non-exclusive service providers eligible to employee benefit schemes as providers available on the platform?
- How will pension schemes, property and health insurance evolve to suit the demands of the sharing space?
- In case of a cyber breach, what could exposures look like and which parties are liable?
While the market is dealing with these grey areas, the insurance void needs to be filled. Faced with developing regulations, inadequate loss history and inability to clearly and objectively price the risk, typical insurance carriers are generally reluctant to cover many aspects of this economy. This thus makes the role of an insurance broker as the intermediary between the insurance market and the sharing economy extremely prudent.
Price Forbes Sharing Economy Practice
At Price Forbes, we are at the forefront of this growing market by establishing a sharing economy practice dedicated to supporting and developing insurance programs for on-demand companies. Given our strong market standing and innovative approach as an independent London broker, we are able to find the necessary capacity to place your special and emerging risks by tailoring the breadth of coverage using manuscript policy forms unique to each client. We offer the full range of services that go beyond typical general liability/mandatory covers. Because of this economy’s emerging nature, we understand that companies in this field are price sensitive, thus by combining coverages under one package we can help take advantage of economies of scale.
Our expertise lies in our ability to clearly define your risks to subsequently tailor an optimum risk management and transfer strategy. In addition, we strongly believe insurance is the solution to unlock revenue streams that have been marred by user uncertainty around risk-exposed transactions. The team has experience:
- working on a wide variety of shared economy accounts
- actively quoting and binding shared economy accounts
- we have a strong and growing relationship with incumbent as well as developing new markets
We handle all shared economy insurance needs, both primary and excess:
- Auto Liability
- General Liability
- Professional Liability
- Employer’s Liability
- Intellectual Property
- Keyman Insurance
- Product Liability
Source: https://www.bcg.com/de-de/publications/2017/strategy-accelerating-growth-consumer-products-hopping-aboard-sharing-economy.aspx ** Source: http://insurancethoughtleadership.com/how-sharing-economy-can-fuel-growth/