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A report from Lloyd’s of London on Tuesday examines the role to be played by insurance in the emerging sharing economy.
Lloyd’s, along with Coleman Parkes Research Ltd., questioned 5,000 consumers – 2,000 each from the U.S and China and 1,000 from the UK – together with 30 sharing economy companies for the report called Sharing Risks, Sharing Rewards: Who Should Bear the Risk in the Sharing Economy?
The report sees the sharing economy as “an economic system based on the use of technology to share assets or services between individuals.”
Nearly three-quarters of consumers, some 71% of respondents, said they would be more likely to use sharing economy services if insurance was offered, and 70% said they would be more likely to share or offer a service if insurance was offered.
A majority of consumers, however, 58% of respondents, said that the risks outweigh the benefits of using sharing economy services.
Just over one-third of consumers, 37% of respondents, said they had not used sharing economy products or services. The three countries, however, differed widely in their responses, with 49% of U.S respondents saying they had not used the sharing economy, compared with 39% in the U.K and just 25% in China.
Lloyd’s is active in insuring the new economy.
“Lloyd’s insures a number of sharing economy companies including Airbnb,” Hank Watkins, New York-based president, North America, Lloyd’s, told Business Insurance.
This provided the insurer with channels for feedback.
“We were hearing from brokers and underwriters in the Lloyd’s market that sharing economy companies were not just buying insurance to protect their balance sheets but also to build credibility and trust with stakeholders including consumers, investors and regulators,” Mr. Watkins said.
The specialty insurer wanted more feedback from consumers, however.
“This was an opportunity to test risk perceptions among consumers as to whether they are more likely to engage in the sharing economy – as a provider sharing an asset/service or as a consumer – when protected by insurance,” Mr. Watkins said.
Insurance is seen as one potential variable that could facilitate wider usage of shared products and services by consumers.
“There is still tremendous untapped opportunity, to grow the number of people using services and sharing assets and insurance has the potential to help unlock future growth,” the report said, noting consultancy PricewaterhouseCoopers L.L.C.’s estimate that the sharing economy will reach $335 billion in value by 2025.
“Insurance is one of many initiatives that could help sharing economy platforms realize this aspiration,” the report said.
This new business frontier presents insurers with opportunity.
“The excess and surplus business thrives on new industries with no track record for claims,” Mr. Watkins said. “That’s a perfect fit for our industry.”
Given that so many companies that constitute the new economy are by their nature new enterprises, the insurance industry can help them establish a foundation.
“The excess and surplus markets can help establish pricing and coverage for this new sharing economy which everybody is concerned about insuring,” Mr. Watkins said.
Insurance could even be used to help companies grow in the new economy.
“In an increasingly competitive environment, sharing economy companies might partner with insurers to enhance credibility, instill confidence and build trust in order to drive business growth and gain a competitive advantage,” the report said.
SAN DIEGO — As the sharing economy continues to grow, so does interest in captive insurers to solve complex coverage dilemmas, according to experts weighing in on liability, regulation and the trend of connecting consumers and service providers via technology platforms.