The Sharing Economy: An Insurance Briefing

Geoff Knott

Non-Exec Director


Online technology has enabled people to share assets, resources, time and skills more efficiently. By helping providers and consumers connect, new technologies help create value, streamline commerce and increase productivity, make accessing markets and employment easier. Enabling this revolution is not just the internet but the internet of things (IoT) as well.
This has created, and continues to create a large, growing, collaborative, enterprise economy in which everyone can participate if they so wish. PwC estimate that the industry will grow from $15 billion in 2013 to $335 billion by 2025. Pew Research estimated in May 2016 that 72% of American adults have used at least one of 11 different shared and on-demand services, with 20% using four or more and 7% six or more.
Well known examples of businesses are Uber (drive A to B), Airbnb (rent house or room), Lyft (ride sharing), JustPark (spare spaces to park), Hassle (book a cleaner), EasyCar Club (rent your car while it is not being used), WeWork (sharing workspace in office building setting) and Vrumi10 (workplace in homes during day).
Apart from economic motivation, there seem to be several other factors at work here:
• Universal access to technology.
• Ease of use and convenience compared to alternatives.
• Companies (especially SMEs) needing a more flexible, adaptable, on-demand business model.
• Environmental concern and the opportunity in this economy for reuse and using finite resources to their optimal ability.
• A desire to escape the narrow, formulaic choices provided by big brands and satisfy a personal need for experiencing something different. In a sense, participating can offer a bit of adventure – staying in someone’s house, using someone’s car, etc.
• Supporting a grassroots movement of small, entrepreneurial traders which reconnects with local people and satisfies a desire for community.
• 65% of people who participate in the sharing economy are women11 – it is a opportunity for women to redefine the future of work.
Key to this sharing or access or collaborative economy are platforms that facilitate such transactions and provide a level of quality assurance. These platforms connect people efficiently and easily and help maximise the value of resources and services whilst lowering cost of access to market.
Risks abound, and standard home, motor, etc., insurance policies do not cover such activities. Information on risk is still emerging. There have been liability claims and lawsuits arising from incidents. Whether these are more numerous than ‘normal’ business activities which are covered under business policies is uncertain at this stage.
However, these cases tend to receive a lot of publicity and can damage a brand as it tries to establish an alternative way of providing a service. Trust remains a fundamental building block of the sharing economy. Sharing economy businesses to varying degrees are offering insurance products themselves to mitigate risks. Key trust questions are: identity (are you who you say you are?), safety (will I be safe using your service?), behaviour (is my property going to be treated well?), and skill (are you qualified and will you do a good job?).
Please download the full report from Ninety using the button in the top right corner of this page.

Previous article

The Wealth Check – Global Content Creation and Delivery

Next article

How Good is Your Brand Purpose?

Get access to valuable thought leadership from the financial services marketing industry

Keep up-to-date with current trends and changes across marketing and financial services is vital in this fast-moving business environment.