Gig Economy and Self-Driving Cars Pose Insurance Challenges and Underwriting Opportunities
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Transportation industry analysts believe that, over the mid- to long-term, more and more consumers are expected to switch to “mobility services” and will forgo car ownership in favor of ride-hailing services and car sharing services. This has profound implications for the future of the automobile insurance industry.
Consequently, insurers are scrambling to devise policy options that cover drivers (or riders, which may include paying passengers) in a wide variety of transportation scenarios. Insurance coverage for ride-hailing companies such as Uber and Lyft currently rely on different auto polices depending on the circumstances of an accident. The Holy Grail for insurance companies will be the ability to sell more expensive and more comprehensive policies to these drivers for Uber and similar firms. However, Uber and similar drivers are on limited budgets and may be resistant to higher operating costs.
There are business opportunities for insurance startups that hope to serve the ride-hailing market. Allstate subsidiary Arity is working to analyze staggering amounts of telematics (digital automobile trip records) data on personal driving habits to help develop such insurance options for the future. Zego, for example, brokers third-party liability insurance for food and package couriers working in Britain. In the U.S., Uber offers insurance coverage to a number of its drivers through major insurance companies. French long-distance carpooling provider BlaBlaCar works through insurance industry giant AXA.
While ride-hailing poses challenges to insurers, self-driving vehicles are even more complicated to insure. Some experts believe that self-driving cars will reduce accidents. This may create significant drops in revenues for insurance underwriters. This will drive insurance industry innovation and force insurance firms to create new types of products aimed at multiple types of consumers: traditional car owners, makers of self-driving vehicles and the software and other technologies that guide them, ride-hailing firms such as Uber, and individual consumers who want better personal coverage when they are riding in vehicles that they do not own.
For everything you need to know about Automobile companies, see: Plunkett’s Automobile Industry Almanac 2021
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Publication Date: September 2020 Price: $379.99
Printed ISBN: 978-1-62831-582-0
eBook ISBN: 978-1-62831-889-0
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