This article was produced in partnership with HDI Global SE, Australia
Bennett Richardson of Insurance Business Australia asked Alex Tarantino, at HDI Global about how insurance fits into the fast-changing business of the sharing economy.
Peer-to-peer services and the sharing economy seem to throw up a new disruptor firm every other week that promises to revolutionize the way we work, eat, travel, spend, communicate or (insert random verb here).
The way the sharing economy works raises fundamental questions that many in the insurance world have not grappled with before. That might be true in some cases, but somebody forgot to tell HDI Global.
Alex Tarantino, HDI regional underwriting manager for liability and cyber, says that in the sharing economy the customer journey has evolved from what used to be relationship with a product to a relationship with its use.
This has big implications for insurance because the owner of the shared asset won’t think about taking out the appropriate insurance themselves. But HDI is working to cover the corporate liability of the new economy and technology entities, says Tarantino.
“Appropriate insurance products are required to be at the right place and time by already being integrated and embedded into the platform customer service,” he says.
The primary vehicle for doing this is third party insurance.
“Then we've got the modular, covered options – so that’s liability for damage in the insurance, care, custody and control,” he says.
“There's also things like cyber, there's data protection, and sometimes sort of bolt on products as well [for] crisis management or loss of turnover.”
It’s a fast-growing area for HDI that has accelerated suddenly with over 80 submissions globally since the start of July 2021 to now. And not from minor players either.
“These are big global sharing economy providers. At the same time, there are also some requests of start-ups who are looking for the right insurance partner who understands their needs and supporting them to grow together” says Tarantino.
Growth in some areas such as micro-mobility is on a rip. Last year, shared e-scooter giant Lime raised $523m in funding. At the beginning of this year, the European micro-mobility platform Bolt raised €628m lifting the company's valuation to a total of €7.4bn.
The number of e-scooters used in sharing services globally is expected to have increased nearly sixfold to 4.6 million in 2024 from 2019 levels, according to market research company Berg Insight.
Companies like these have third-party liability cover for riders that includes bodily injury and property damage during use of vehicle, as well personal accident.
Another area is the shared use of private assets such as campervans, or holiday homes on platforms like Camplify or AirBnB. The typical set up for this version of the shared economy involves a group policy scheme, with the business platform owner as the policy holder.
This allows the users of the platform service coverage under the policy as a beneficiary, says Tarantino.
“The pricing structure is based on a per usage, or transaction basis.”
Other types of Insurance for technology driven companies include contractual liability coverage for financial reimbursement resulting from non-performance or mal-performance of a promised service. For example the secure storage, custody and transfer of digital assets including cryptocurrency.
One of the problems in dealing with insurance in the sharing economy is how to accurately assess risk given the lack of historical data for many of these new businesses. While HDI uses algorithms to help assess risk, an important part of the equation is allowing access to the usage data with additional premiums charged based on use.
“We ask for usage volume, the product type, quality control and maintenance, the geography, location, control of that usage, any previous losses and lessons learned.”
In addition, any data from global markets are applied locally. A lot of the companies and services began in Europe or the US before they moved into Australia.
“When brokers approach us with sharing economy opportunities here, we are able to tap into that expertise,” says Tarantino.
In the rapidly evolving post-pandemic economy, brokers are looking for opportunities in the shared economy space to evolve and move with the times.
Brokers can help new economy platforms accelerate successfully by enhancing their value proposition and managing the shifting risk landscape.
The new economy is here to stay but to help it grow, robust insurance is needed to enable trust and reduce financial exposure for users, says Tarantino.
In the early stages of growth, success or failure of a business can often ride on public perception of a service or product and limiting risk plays a key role in ensuring that unfortunate incidents don’t trip up what would otherwise be a viable idea.
“Having an insurance solution is really, really critical to protect them and their business for the future,” says Tarantino.
If you’d like to hear more from Alex Tarantino and the team, please join them for a free 1 hour lunch and learn session on Insurance Innovation on Wednesday 10th August, 12-1pm. RSVP here.
Alex Tarantino has been with HDI Global SE since 2019 and is Regional Underwriting Manager Liability and Cyber, Australasia and ASEAN. He has 21 years of international underwriting experience starting in casualty with Royal & Sun Alliance (UK) on their Business Graduate program before joining Lloyds Casualty Syndicate DAC 386, International Liability. In 2012 Alex relocated to Toronto to set up the Casualty team and domestic Casualty proposition, focusing on mid-market business. He relocated from Canada to Australia in 2015 with Pen Underwriting before moving to Zurich – Head of Liability, Australia and New Zealand, (Corporate, Commercial and Energy) in 2016.
