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Insurers must evolve or risk stifling sharing economy: Marsh

4th October 2021 - Author: Matt Sheehan

Insurance broker and risk advisor Marsh has asserted that insurers must create new forms of coverage, including programs to support gig-workers at scale, in order to support changes in the global sharing economy and mobility sector.

gig economy courierIn a new report, analysts at Marsh noted that the COVID-19 pandemic has already accelerated mobility changes such as last-mile delivery, driverless delivery and e-scooters, with trends set to continue over the next 18 months.

However, the broker warns that the progress of this industry could be “hindered” if insurance doesn’t evolve alongside these changes.

“It is remarkable how the pandemic has accelerated adoption of new mobility habits around the world,” said James Rose, Head of Marsh’s US Sharing Economy and Mobility Center of Excellence. “What hasn’t changed, however, is the need for society to trust that these modes of transport are safe.”

“Insurance is essentially a ‘promise to pay’ and as such, plays an essential part in the trust dynamic that facilitates permission to operate and protects the platform and the user where responsibility for risks may not be clear,” he continued. “If insurance can keep pace and evolve with this accelerating mobility shift, it can empower growth and possibility in this sector for many years to come.”

While the concepts of self-employment and independent contractors are not new, Marsh argues that digital companies providing wheel-based services have accelerated access to this type of work and highlighted the deficiencies in a social safety net to support them should they be injured on the job and lose income.

In the same way that digitized payments can lead to digitized risk, so too can digitized income lead to a form of distributed portable benefits supported through a combination of public programs and private industry, it added.

Analysts also see opportunities for insurers in advanced sensor technology that can track human driving behaviour, with many Original Equipment Manufacturers (OEMs) already capitalizing sensor-enabled electric vehicle models to reward insureds with safer driving behavior.

Similarly, Marsh believes that the increased use of digital payments for various modes of transport, from e-scooters to public transportation to car share rides, also will lead to the creation of innovative insurance solutions.

“The use of data from individual digital journeys can not only drastically improve the claims management process, but also create an opportunity for real-time individualized on-demand insurance,” the report concluded.

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