The Sharing Economy and Insurance playing catching.
Updated: Oct 10, 2018
You may or may not have heard of the sharing economy but if you haven’t, you certainly will in the future. Two of the fastest growing services in this space are UBER, the taxi hire firm which sees its drivers using their own cars and Airbnb, a peer to peer rental business which has so far signed up over 1.5m customers in over 190 countries.
PwC research suggests that revenues within this sector are in the region of £500m in the UK today but will rise to £9bn by 2025 and globally from £5bn to a staggering £230bn.
These shared services however have presented a challenge to the traditional insurance market. This type of activity would not be covered by a normal insurance contract:
Image the driver who has an accident during a trip as an Uber driver. Under a traditional policy, hire and reward would be excluded.
The owners who sublet their house while on holiday only to find it flooded on their return. Again traditionally insurance from paying guests would be excluded.
Hiring out goods to friends and neighbours that are subsequently broken would not be covered under contents insurance.
As the number of such services multiply and with new companies in this space springing up daily, the insurance market has faced demands for a new type of coverage. A meeting to address the issue took place at Downing Street in the summer and included representatives of large brokers, insurers and industry bodies. The British Insurance Brokers’ Association (BIBA) published guidelines for the industry in November.
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