As people increasingly rely on sharing economy platforms to buy services or rent possessions from their peers, significant opportunities are emerging for insurers and reinsurers to adapt traditional coverages to fit the unique needs of this sector, according to a new study by Lloyd’s and Deloitte.
Looking at the populations of six key markets (China, United Arab Emirates, Germany, France, UK, and the U.S), Lloyd’s found that more than a quarter of people had used sharing economy platforms in the last three years, and identified potential for this figure to grow by double digits.
The report also highlighted that participating in the sharing economy entailed significant risks, and found that 57% of adults who had used it to sell services or lend products over the last three years were insured by transaction-embedded or personally owned cover.
To ensure protection for all parties, Lloyd’s proposed that insurers should meet the needs of this sector by offering solutions provided by platforms via transaction-embedded cover, or products purchased independently by sharing economy participants.
It noted that, while a range of insurance products currently on offer cover potential risks like loss of possession, liability, and damage, the rapid growth of the sector means the nature of risks will likely continue to grow and diversify.
Trevor Maynard, Lloyd’s Head of Innovation, said: “Sharing economy platforms have transformed entire industries because they’ve rejected the status quo and challenged the way we think about once traditional goods and services. In order to effectively serve the sharing economy, we as insurers must follow that example and rethink traditional insurance products.”
Lloyd’s and Deloitte also found that the use of sharing economy platforms, and thus the demand for insurance, varied significantly by country and geography.
In the U.S for instance, where the sharing economy was conceived, use is less widespread than in China or the UAE, while the UK had by far the lowest participation levels on both the supply and demand sides, with just 9% of people having shared in the past three years.
This figure is ten percentage points lower than European neighbour Germany, and far below China, which topped the list with 73% of the online population having acted as consumers in the sharing economy over the last three years, and 55% as suppliers of goods and services.
Nigel Walsh, Partner in Deloitte Digital, also commented: “In our market scanning, we’re not only seeing an increasing number of sharing economy platforms provide insurance to their users, including bespoke products through the Lloyd’s market, but also a large number of startups helping to solve the insurance gap for all participants in the sharing economy.
“Equally, insurers are still in the very early stages of developing the dynamic and flexible solutions this sectors needs as it continues to evolve at pace. The opportunity for sharing economy companies and insurers to partner to reduce risk in this space has real implications and exciting opportunities for future growth.”