Why Sharing Economy Companies Can Be Insurance&#39;s Best Customers

Why Sharing Economy Companies Can Be Insurance's Best Customers

Imagine insurance clients who would like to meet with their insurance broker. Clients who do not see insurance as a heavy mandate, but as an integral part of their own success and that of their clients. Insurance buyers who are enthusiastic about discussing risks and coverages regularly, and not just reluctantly once a year. Customers who want to share safety and performance data. Or customers who don't see insurance as a cost element, but as a revenue generator.

These insurance customers exist. Some of them are from the sharing economy and three of them recently shared their insurance experiences as part of a Lloyd's of London webinar called The Sharing Economy.

Host Rosie Denee, Head of Innovation and Thought Leadership at Lloyd's, highlighted how the pandemic has recalibrated the sharing economy of independent contractors, contractors, service providers, drivers, landlords, tenants , drivers and buyers and the tech platforms they love.

“Companies have had to adapt to changing demand and seize new growth opportunities, especially in delivery services, but also in urban mobility and accommodation,” she said.

"The demand for shared services now varies widely based on individual business models and companies are adjusting to the new norm as consumer preferences may have changed indefinitely."

Denee cited Airbnb as an example. For the year 2020, Airbnb reported that the number of bookings fell by 40% and revenue by 30%. Since the start of the pandemic, Airbnb customers have stayed close to home, traveled by car, stayed longer, and prioritized safety and affordability. Tenants now prefer to rent a house or apartment rather than a room in a shared house.

Another example could be Uber, where revenues from rides fell sharply in 2020. But Uber was able to make up for its lost passenger trips with food order deliveries from its company Uber Eats, where revenues doubled during the pandemic. , Reuters said. Uber also acquired smaller rival Post Comrades and the Drizly liquor delivery service.

Denee believes the insurance industry initially struggled to create protections to meet the needs of the sharing economy. But that has changed.

“Over the past 10 years, the sharing economy has seen and driven a cultural shift in the insurance industry,” she said, adding that flexibility is “the essence” of the economy. sharing, which has forced insurance providers to offer more flexibility. . insurance plans.

"However, there is still a long way to go in this area if the insurance industry is to meet the demands of the sharing economy."

The webinar featured three sharing economy insurance clients:

Via Transportation, based in New York, which provides on-demand ridesharing software and services to cities, schools, universities, hospitals and businesses;
Dallas-based ShearShare, which brings together hairdressers with clients and salon workers with empty seats; and
Outdoorsy, based in Austin, Texas, a peer-to-peer rental marketplace for recreational vehicle (RV) owners.

As different as their clients are, the three companies and their executives have a lot in common, starting with Lloyd's insurance broker, Chris Moore. Moore heads the Apollo Syndicate Management special unit, ibott (Today's Insurance for Tomorrow's Businesses), specializing in sharing economy businesses. Moore has worked for Apollo since 2013 and was instrumental in founding ibott. He is a member of the Lloyd's Innovation Panel and the Lloyd's Market Association Committee for both United States. like International Casualty.

Moore, who works with each of these clients, says they share a perspective.

“They are not interested in ready-to-use products. They are interested in products that are tailor-made for their business that can grow their platforms and protect the market for users of that platform, ”said Moore.

Moore has grown to appreciate the mindset of these tech and business entrepreneurs and enjoyed working with them to model and then reinvent the products they need. "It's different. When I talk to these guys, it's not a look at insurance like: "It's that time of year again. I need to renew my insurance policy," he says.

He previously claimed that they were like him, constantly thinking about insurance. “It's so essential to their business and they are constantly on the lookout for partners who want to understand them, understand their business and support them in these new products for their dynamic or evolving business,” Moore told about his clients.

In turn, business owners are happy to have found someone who listens to them and understands the importance of insurance to their current customers and the future of their business.

Erin Abrams is General Counsel at Via Transportation, the on-demand shared transportation software platform. It offers its software as a service in 200 cities and countries around the world and provides a complete turnkey solution for private and public transport companies.

Abrams became the company's insurance consultant because she made eye contact with the CEO when he asked who would do it and no one else at the meeting looked up. She says she doesn't regret it. As Via has grown and evolved, insurance is jointly managed by the legal and finance teams.

Colin Gardiner calls Outdoorsy "the Airbnb of RVs". It has nearly $ 1 billion in sales in its market, from people leasing RVs to neighbors and strangers. It operates in Canada, the United States, Australia, New Zealand and also travels to Europe.

“It's really a company that is very active right now as everyone is stuck at home in so many ways,” he said.

Gardiner's interest in insurance stems from his role as Chief Revenue Officer. “I focus on everything related to growth and monetization and I think it's a different approach,” he explained. “We don't see insurance as a cost item. We see it as a strategic advantage, so we really use it to our advantage. "

In fact, Outdoorsy has evolved into a full-service RV insurance provider, selling insurance for its members not only when they are renting, but also when they are out of their rental period.

If Outdoorsy is "Airbnb for RVs," ShearShare is "Hairbnb" for the beauty industry. Courtney and Dr. Tye Caldwell created the platform to solve what they know from their 30 years of experience with beauty salon businesses is a major problem, which has become even more acute during the pandemic. The company serves independent beauty professionals who need a location and salons and hairdressers who have empty space available for daily rental. In the words of the Caldwells, ShearShare is a “machine learning-enabled mobile marketplace”. ShearShare is now present in more than 800 cities.

They pride themselves on helping people rebuild their businesses after the pandemic and closures. “We make it possible for stylists to return to work safely in private, cleaned and safe salon spaces for everyday work and we help keep our small, physical businesses open,” said Courtney Caldwell.

Realtor Moore said when he first met the Caldwells a few years ago, he noticed how much they thought about insurance needs "from the start" and how they said security was important.

“For many companies it is so often an afterthought and it is almost like: 'We are ready. Who has taken out insurance? ''

But the Caldwells "had it from the start," and insurance has been an important pillar of their business, he said.

ShearShare's Courtney Caldwell told Moore that no other insurance company would risk it in 2017 when she started her business. “They didn't really understand the beauty industry. They failed to understand that we were the second largest industry for freelancers and independent contractors. But you [Lloyd's] jumped into this great ocean with us and we appreciate that, ”she said.

Today, stylists can “find a day-to-day workplace on the ShearShare platform and purchase professional indemnity insurance for as little as five dollars. It's great, ”she said.

For Abrams of Via Transportation, insurance plays an important role because, although Via is a technology company that provides transit software, it also provides transit operations and therefore carries both physical and real risks to operations.

But it is not the same traditional auto show as a former transport company with employees and its own vehicles. Via mainly works with independent contractors and does not usually own the vehicles running on its platform. “In some cases we carry out the implementations. In other cases, our partners carry out the implementations, ”she explains.

Many of Via's partners are governments with different risk tolerances and projects with different use cases, perhaps non-emergency medical transportation or educational transportation.

In addition, as Via is required to bid competitively, Abrams has stated that it needs a program from which it can pull specific tailor-made insurance coverages that meet the needs of a program or specific implementation, and often at short notice. Via may not win the offer if the insurance is not properly designed and priced.

“So it is very important for us to build in the insurance costs in the margin and some vpredictability about what those insurance costs will be, ”she explained.

“This is not really how the insurance industry has traditionally been structured,” said Abrams, referring to the degree of flexibility and customization required by Via.

Abrams praised Moore and Apollo for their willingness to immerse themselves in a new business model and see how Vias differs from legacy operators, not just at the start, but throughout the company's journey.

For Gardiner of Outdoorsy, seeing insurance not only as a necessity for the business, but also as a generator of revenue and business, is part of an overall customer experience philosophy. "What are the things that set you apart and really give you control?" is the question he asks. One answer, he says, is insurance.

He cites an example of someone renting a motorhome after an accident. This owner must take the RV offline and cannot rent it while the claim is being processed and the vehicle is repaired. Everyone loses income as the claims last. If Outdoorsy can help expedite the claim, everyone wins. For example, insurance helps improve the customer experience.

Controlling the user experience is also key - which is why Outdoorsy has also invested in its own in-house complaints company, which Gardiner says also helps control costs.

A similar philosophy of flexibility, personalization and customer experience is at work at ShearShare.

According to Dr. Tye Caldwell is integrating insurance into ShearShare's business model by increasing customer satisfaction with the platform. The goal of ShearShare is to let their users know that they're not just there to make money, but to help them grow their own businesses and take care of themselves when the going goes wrong.

“We always wanted to give them the chance to look back and say, 'Hey, you know what? ShearShare takes care of us, they think of us first, and it's not just about raising a dollar and being part of a platform as a number, '' he said.

Even when the best stylists are working on clients, bad things can happen - a pinch in the ear with the trimmer, a burn with a curling iron, a skin infection from leaving a hair product on for too long, or even a loss of strength or equipment. .

“Anything is possible. So having that assurance gives them the protection they need and it really calms their minds,” he said.

Courtney Caldwell sees her independent beauty and hairstyling professionals as "solo renderers" for which there is no business-to-business ecosystem where they can, at all times, obtain the tools or resources. they need and pay for what they use. In other words, until the Caldwells show up.

“No matter what your small business, I think there are three constants. You are always looking to increase your income, reduce your costs and reduce your risk, ”she said.

She said their clients “use and leverage the ShearShare platform to grow their small business on top of our small business,” because they know that when they come to ShearShare, they can very easily get the resources they need. they need and their income. .

While physical salons, hair salons, or spa owners likely have insurance, this is less often the case with independent contractors.

"Where are you going to buy this each day?" It didn't exist until ShearShare and Lloyd's decided to work together, '' she explained. “We are a pioneer of on-demand workplaces for beauty and hairstyling professionals and we are a pioneer in professional liability insurance every day.

Moore added that the insurance product offers more than just protection; it can also cause a "stick" to customers.

Beauty solopreneurs can go to a local beauty store to negotiate or go to ShearShare and get reservations and insurance that will protect them. "Why would they leave the platform? I think it's those support services that keep them coming back to ShearShare, '' Moore said.

Data collaboration

According to Moore, data is an essential part of business sharing. Data can not only inform insurers, but also influence decisions about what to offer, where to offer, what schedule to follow, and more.

Abrams of Via said the real strength of his tech company is data.ees available to it. Via's patented technology identifies and updates the best travel routes, virtual bus stops, where different people can be picked up and dropped off. It also tracks the number of passengers in a vehicle and other information that makes routes more efficient.

In addition to the data it has for its own use, Via also provides data at its level to municipalities and private and public transport operators on how people are using the service, whether they are using their fleet efficiently and refueling. or empty as many vehicles as possible It can also reveal how they serve low-income communities or people who may not have access to other modes of transportation.

Via also collects safety data on the vehicles themselves and telematics data on driver safety.

When Via shares its data with its expert rers, it makes sure Via takes credit for the data showing that it is a safer operator than perhaps some of the transit operators with which Via competes. “We believe we should be judged on the merits of our own data and our own strong safety record. And the fact that we have more data to share with insurers should allow them to do more detailed calculations on our risks, which should also benefit us, ”said Abrams.

“For us, it's all about collaboration,” said Moore. “Storing data costs money; it takes time and effort to collect data. We only want valuable data. "

With the partnership, he said his team can give policyholders transparency about what affects insurance costs and what a company can do to change that during the insurance period, not 12 months.

Gardiner said Outdoorsy has more information about its hosts, their behavior, and their vehicles than any insurance company. One reason is that it offers them personal and business insurance even outside the rental season. He knows how many days they rent him, when their car has been serviced, and more.

“One of the benefits of collecting all this data is that we can quote very quickly. We already know all of their information from their vehicles, things like that,” Gardiner said.

In addition to data to optimize the user experience, it is also useful for business management. “As a platform, we care deeply about retaining our users, so we want to use this data to deliver the best products at low prices so they don't go anywhere else. We want to be a one-stop shop, ”he said.

"We're the RV experts, but we're not really the insurance experts for these RVs," Gardiner added. He said the collaboration is helpful for digging deeper into the data and understanding scoring factors together.

Outdoorsy also focuses on risk reduction. It has invested in machine learning models and data points to move beyond traditional metrics such as driver checks. “People have a driving history, but it is not necessarily a motorhome driving history. So for us it is very important to build a people assessment model before hiring, ”said Gardiner.

The model helps Outdoorsy decide what to charge, be it a higher deductible or a higher security deposit. "I think the more data you have, the better the products you can deliver and the better you can set expectations for your users," he said.

At ShearShare, Courtney Caldwell said their data shows where stylists and salons are located across the country, how many days a licensed stylist works, and even stylists' willingness to walk more than 10 miles outside their home. The data can be used by stylists to decide which salons to choose for specific clients. Perhaps one client likes a cool barber shop and another likes a "mama" atmosphere. Or someone is closer to one store than another.

The data also helps them with their dynamic pricing. “If you think of ShearShare as if you might be renting a motorhome early or buying a plane ticket, your price may be different if you book two weeks in advance than the day before,” said Courtney Caldwell.

Lessons for insurers

Moore sought advice from his clients for brokers and insurers who were just beginning to explore the sub-sector insurance market.

“I notice how insurers see the past as a predictor of the future and are so focused on a company's loss history and the industry's loss history,” said Abrams.

“Most of us have gone into these different activities to disrupt old industries. So I don't think old industry data is necessarily the best indicator of where our business is headed. "

She said startups are evolving rapidly and are always adapting their products and services, sometimes several times a year. "So I think for us the past is not always the best predictor of the future," she added.

In terms of advice to brokers and insurers, Abrams urged them to project with their startups into the future and "brainstorm where will our business be in a year, where will our business be in three years?"

She urged brokers to think about these kinds of outlook and risk factors, because that's how startups see the world.

Gardiner at Outdoorsy believes it is important for insurance professionals to understand that they provide insurance to technology companies that collect customers and therefore need to think about those end customers.

“We may be your customer in the sense of paying an invoice, but ultimately the consumer is the customer. And we bring these people together in a certain way, according to a certain profile of risk and behavior, and that is just a characteristic of this group, ”he explained.

ShearShare's Courtney Caldwell sees the industry's role as helping to educate customers about the need for insurance. “You don't have to know everything about beauty and hair styling. You don't need to know everything about micro transport or recreational vehicles. Let's do that, ”she said. "We're counting on you to help educate our user base."

Top Photo: Outdoorsy customers enjoying their RV trip. Photo from Outdoorsy.