Other parts of this series:
Last week I explored whether driverless cars are proving to be the disruptive force that industry visionaries predicted. In this week’s installment, I am looking at whether another predicted disruptor, the sharing economy, is living up to the hype.
There is no doubt that sharing economy innovators such as Uber, Lyft and Airbnb have created a splash in their respective industries. Other companies such as personal car-rental app Turo and group dining experience Feastly have introduced their own offerings, as have dozens of start-ups, each with their own angle and offering.
But despite the apparent success of Uber and Airbnb, has the sharing economy really struck a chord with consumers? A recent Pew Research study found that only 15% of Americans have used a ride hailing app and only 11% have used a home sharing service. While this may seem like great penetration for a technology that wasn’t used a decade ago, there is some evidence that home sharing services in particular are already on the decline as users experience less than ideal rentals and experiences.
The insurance industry appears to be embracing the marketplace after a fairly slow start, with a few outliers leading the charge. In Canada, Intact has developed a policy exclusively for Turo vehicle owners, and Aviva, Intact and others are targeting Uber drivers. In the US, a large number of insurers are jumping on the ridesharing bandwagon, including Geico and State Farm. A smaller number of companies are offering home-rental coverage. True disruptive solutions haven’t really materialize however and most offerings stick to the standard formats and rating structures.
Perhaps the largest opportunity for insurers to date has been underwriting the service’s own insurance policy. Many service providers offer their users insurance protection while they use the service or offer an umbrella policy that sits on top of the user’s own coverage. Airbnb’s million-dollar liability insurance for the homeowner is underwritten by Lloyds while Intact underwrites Uber’s master policy in Canada. There is even a start-up, SafeShare that specializes in providing sharing economy services with insurance protection.
Has the sharing economy disrupted the insurance industry? I believe the answer is no. There are certainly a few companies benefitting from the surge in the number of services being launched, but for many, this is simply another class of business to add to their existing offerings with minimal revenue growth to date.
Next week and I going to take a look at how Telematics is doing within the industry and whether it is living up to its initial hype.