Insurance Journal examined industries experiencing changes, challenges, expansions and growth in the past year and picked the top five market sectors that could offer opportunities for agents and brokers in the property/casualty insurance industry in 2017. Each market is detailed on MyNewMarkets.com.
Sharing Economy Market Continues to Grow, Evolve
The idea of sharing resources as a small business opportunity continues to gather interest from a growing number of Americans. People continue to play in the gig economy by sharing their homes, vacation properties, collector cars, recreational boats, ridesharing digital platforms like Uber or Lyft, and even household tools.
In the context of gig employment, nearly one-in-10 Americans (8 percent) have earned money in the last year using digital platforms to take on a job or task, according to the Pew Research Center survey conducted in August 2016.
“Nearly one-in-five Americans (18 percent) have earned money in the last year by selling something online, while 1 percent have rented out their properties on a home-sharing site. Adding up everyone who has performed at least one of these three activities, some 24 percent of American adults have earned money in the “platform economy” over the last year.”
As the sharing economy continues to evolve and grow so does the insurance market. But emerging risks associated with the sharing economy and new technology that enables this budding industry poses challenges for insurers.
Because insurers don’t have a good handle on future exposures of shared economy risks, education is key, said Scott Kellers, head of Syndicate and Reinsurance Claims for London-based Liberty Specialty Markets.
Pete Fennell, managing director of Aon Benfield and immediate past president of the International Association of Claim Professionals, said that future exposure will be hard to assess. He offered the example of Uber, which doesn’t consider itself to be a transportation company but rather a software company. “Are they? How does that get insured? Who’s paying the claim if there is a claim? Airbnb just got sued recently for discrimination. Is it Airbnb’s liability? Is it the homeowner’s liability? This is a really gray area right now,” Fennel said.
The lines between underwriting personal and commercial property risks are blurring as the sharing economy evolves, Christopher Pesce, president of Maritime Program Group, told Insurance Journal last fall. “Look at some of these rental operations, at Airbnb, and how the market responded to the fact that there is now a mixed commercial use of what’s otherwise considered personal property.”
Pesce believes the insurance industry has and will continue to find ways to insure sharing economy risks. “I think we have an advantage from the standpoint of really knowing and understanding the risk.”
There are some insurance markets developing solutionroductss today. One just released this month is pay-per-use insurance option by Slice Labs Inc.
Slice is a tech startup featuring an on-demand insurance platform for people who share or rent their homes. The pay-per-use insurance coverage is available on a limited basis in six states: Colorado, Iowa, Maryland, Massachusetts, Texas and Washington.
The Slice product is a customized commercial policy. It is for users of homeshare sites like Airbnb, HomeAway, OneFineStay and FlipKey. Users can purchase the coverage through an app or online and turn it off-and-on as needed by the week, day or hour. The coverage can be for a room in a house or condo, or an entire residence. The customized commercial insurance policy includes commercial liability coverage limits of $2 million, full replacement cost value of the home, and low or no deductible coverages. The offer is not open to the overall public yet but homeshare hosts in those states can get access to the Slice offerings on an individual basis.
Slice, headquartered in New York City, is backed by Horizons Ventures, XL Innovate and Munich Re. It is currently licensed to sell insurance in 49 states. The company says it has plans to eventually offer a ridesharing insurance product as well.
Homeshare platforms like Airbnb tend to offer limited property damage and liability protection for hosts who rent their space using their sites.
Other platforms such as GetMyBoat.com advise purchasing additional coverage if a boat owner’s personal boat owner’s policy doesn’t cover charters/rentals.
Traditional insurers are also moving into the sharing economy space. Last spring, Allstate began offering homesharing protection in six states — Arizona, Colorado, Illinois, Michigan, Tennessee and Utah — and said it plans to expand it to others this year.
In November, ISO, the policy and rate development organization used by many P/C insurers, introduced homesharing insurance options for insurers to adopt for their home insurance customers who might rent or share their properties.