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Global business expansion reveals a world of difference in auto coverage

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With ride-sharing auto insurance regulations largely in place in the United States, Uber Technologies Inc.'s Gus Fuldner is paying more attention to the international scene.

This means that after a period of frequent visits to state capitals, Mr. Fuldner as Uber's head of insurance now spends much of his time traveling internationally, including a recent trip in which he visited nine countries in two weeks.

Uber, founded in 2009, operates in 69 countries.

“Auto insurance is very local, and the structure of typical insurance coverage as well as the sort of legal system around auto insurance liability varies country to country,” said Mr. Fuldner.

“We spend a lot of time country-by-country, figuring out what is the system in that country and that's part of the reason” Uber has a substantial legal and regulatory team. The team works to understand each country's auto insurance system “and then build the solutions that enable our business in each country,” he said.

Under China's compulsory auto insurance policy, for instance, there is more coverage for someone outside the vehicle than there is for the passenger inside, he said.

In China, Uber built an insurance program with Hong Kong-based China Taiping Insurance Group Ltd., a state-owned insurer.

“I lived in Hong Kong from 2006 to 2009, and can have a conversation in Chinese,” although it is “not the most elegant,” Mr. Fuldner confessed. However, it “was certainly useful in going over there and working with insurers.”

“In contrast, in New Zealand, there is basically no liability for bodily injury arising from an auto accident,” Mr. Fuldner said. New Zealand has a gas tax-funded government fund “that covers basically all auto injuries in the whole country.”

As a result, “you can't sue someone in New Zealand for your bodily injury from an auto accident.” So Uber “had to build coverage that was different,” he said.

Karim Hirji, Toronto-based senior vice president for international and ventures with insurer Intact Financial Corp., is working with Mr. Fuldner to introduce ride-sharing coverage in three provinces: Alberta, where an implementation date has been set for July 1, and Ontario and Quebec, where discussions with regulators are ongoing.

Having Mr. Fuldner as a partner “makes it quite easy” because of the in-depth knowledge he contributes, said Mr. Hirji.

“I can't overemphasize how much our insurance is superlocal. That's something that I often have interesting conversations with senior executives and brokers about, because so many other lines of corporate insurance are very much global,” he said. “It's very straightforward to build a global property insurance program,” but “auto insurance and maybe workers comp are the two things that are very country-specific.”

Some countries' insurance requirements are like New Zealand,” but in other places “you're buying auto insurance from the government,” as is the case in Melbourne, Australia, or Vancouver, British Columbia, said Mr. Fuldner.

“As much as insurers talk about having a global insurer value proposition, when you get down into the details, particularly in auto insurance, of individual countries,” that solution does not work, Mr. Fuldner said. “You can buy global (directors and officers liability coverage), but in automobile insurance local details emerge and it's very, very difficult to create global consistency.”

Furthermore, “there aren't that many people who have the scale or sort of global auto exposure that we do,” he said. “Most trucking companies or postal carriers tend to be very local. The category of business we find is most similar in its local exposure nature is packaging and logistics companies. They have delivery trucks in as many countries as we have partner drivers.”

When it comes to auto insurance, “the devil's in the details,” said Mr. Fuldner.

While Uber's U.S. ride-sharing business is primarily insured through Richmond, Virginia-based James River Insurance Co., other risks may be insured with a captive, including auto insurance for different jurisdictions around the world.

The captive “doesn't insure the public. We use it as a way to basically share risk with insurers, to address the fact that we have a bunch of new and emerging risks and that often insurers are uncertain how to price that,” said Mr. Fuldner, who declined to provide the captive's name, its domicile and further details.

Mr. Fuldner said the challenge in talking to an insurer about ride-sharing risks, particularly when Uber was developing its program, is describing how the risks a part-time ride-sharing driver under Uber's business model differ from those of a taxi or limo driver.

Mr. Fuldner said he has often been in situations where an insurer was just told that Uber was new to a market, only to respond with, “Great, can you send us three or five years' of loss data?”

“That left us often with kind of this situation where it was difficult to get things moving and us being willing to share in the risk” via Uber's captive. The captive “makes the insurance company more comfortable” with a new business or a new business model “that they haven't written before,” said Mr. Fuldner.

“We're using it to basically share in auto risks,” he said of the captive. “I think of it basically as a way to help with (research and development) in that, because insurers don't have five, 10 years of loss history in the ride-sharing space, what we can do is make them more comfortable with experimenting in this space, because they know we're taking some of the risk.”

The insurer provides coverage to protect the public, “and then we're in the background sharing in the risk with the insurance company” through the captive, Mr. Fuldner said.

Uber uses its captive selectively, he said. “If insurance is readily available in a market, we'll buy insurance in a more traditional way.”

And “what we're seeing over time in some of the markets where we've been there for two getting on three years at this point ... (is) insurers getting much more comfortable with the risks, and saying they'd be willing to quote it without participation from our captive.”

The challenge of doing international business goes beyond insurance, he said.

“We have offices around the world and employees around the world and insurance requirements around the world — not just for auto, but for general liability and property and other lines of business — that any large company could buy,” he said.

Uber's general liability coverage is provided by Chicago-based Old Republic General Insurance Corp.