As of January 2013, there were 46 active car-sharing programs and over 1 million members in North America alone. Worldwide, car-sharing companies operate in more than 27 countries on five continents with over 1.7 million members. Given the momentum behind the sharing economy, it may be time for insurers to take a closer look at this emerging market opportunity.
Insurers may have an opportunity to lead innovation in the sharing economy, particularly in the car-sharing market. In much the same way as they have provided sound leadership decisions about innovations in the past, the decisions about whether and how to get involved in the sharing economy should start by looking at some basic questions.
What is the market opportunity?
What is the market size now, and what are the projections? The idea of car sharing is gaining traction, and thus considerable study is being given to its potential. Insurers should ask themselves not only about market growth projections, but also what portion of those revenues could belong to insurance?
What are the market needs?
Car-sharing companies and renters are proactively reaching out to insurers to provide insight into their unique business models and risk needs. Take advantage of this opportunity to talk in depth with this potential new customer base, and explore different models and products that might meet their needs.
What types of data are needed for accurate risk assessment, and where can that data be obtained?
Car-sharing companies are already capturing information on their owners and drivers. Further, peer reviews are providing additional data not traditionally available to insurance companies. Work with these start-ups to determine what types of data are available, what needs to be captured, and how that data can be collected and used.
How can this data be used to assess whether the car-sharing market aligns with your risk appetite?
Most insurance companies have a clearly defined and communicated risk appetite. By its very nature, the car-sharing market will not automatically fit into any pre-established category. By conducting a careful assessment of market potential and available data, insurance companies can determine if they want to explore this opportunity further.
Insurance companies have always been leaders in developing products and services that meet market needs. Today, with more advanced data-capturing mechanisms and predictive analytics, insurers understand each of their customers at a much more granular level. It’s time for insurance companies to apply this same expertise to the sharing economy. It’s time for them to determine if the opportunity is worth the risk.