Life Insurance

Insurance for global sharing economy must evolve – Marsh

The COVID-19 pandemic is reshaping mobility patterns and the sharing economy around the world, Marsh said. Mobility habits – such as the surge in last-mile delivery and the increasing popularity of e-scooters – will continue to evolve quickly over the next 18 months, according to the report. However, if insurance fails to evolve in kind, progress could be stalled.

The report outlines several trends that are creating opportunities for the evolution of insurance, including supporting gig workers at scale.

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

In the same way that digitized payments can result in digitized risk, digitized income can lead to a form of distributed portable benefits supported through a combination of private industry and public programs, the report said.

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Advanced sensor technology that can track human driving behavior is also creating opportunity, Marsh said. A number of original equipment manufacturers (OEMs) are investing in their own early-stage, in-house insurance companies, taking advantage of new sensor-enabled electric vehicles. With OEMs offering personal auto liability and motor insurance at the point of sale and rewarding safe driving behavior based on the data they collect, traditional insurers may find themselves “on a burning platform, with an acute need to evolve,” the report said.

The increased use of digital payments for different modes of transportation, from e-scooters to ride-sharing services, will also lead to the creation of new insurance products, it added. The use of data from individual digital journeys creates the opportunity for real-time, on-demand insurance.

“It is remarkable how the pandemic has accelerated the 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. 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.”

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