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Gig Economy and Self-Driving Cars Pose Insurance Challenges and Underwriting Opportunities, Business and Industry Trends Analysis

Transportation industry analysts believe that, over the mid- to long-term, more and more consumers will forgo car ownership in favor of ride-hailing services (such as Uber, Didi and Lyft).  This has profound implications for the future of the automobile insurance industry, in the same way that it will deeply affect the automobile manufacturing sector.
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.  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.  Arity says it has access to more than 1 billion miles of new driver information per month on top of 10 years of archival data from Drivewise, another Allstate subsidiary.  Analysis of this data may help Allstate form a benchmark for future rates in emerging mobility services trips.
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.  Zego, for example, brokers third-party liability insurance for food and package couriers working in the UK, Ireland, France and Spain, including those carrying orders for firms ranging from Deliveroo to Amazon.
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, citing data that indicates that as much as 94% of all accidents are caused by human error.  This may create significant drops in revenues for insurance underwriters.  For example, there may be fewer automobile-related wrecks, fatalities and personal injuries in the future, not to mention fewer individual car owners.  It is possible that insurance premiums will become much more competitive and drop if accidents become rarer.  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.

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