As the world becomes more connected, the ideas of sharing, ownership and the way we work are being turned on their head. The way the insurance industry reacts will be crucial.

Peer-to-peer

Peer-to-peer (P2P) car sharing lets the owner make money from renting their vehicle when it’s not in use, often via a P2P platform. Personal car
insurance policies usually exclude this renting out activity for individuals. However, providing an insurance solution to a marketplace platform such as Drivy means a separate policy covering the vehicle and the renter supersedes the renter’s personal insurance for the duration of the rental, protecting the vehicle owner in the event of a loss.

There is an inherent risk in entrusting your vehicle to a stranger, so P2P platforms used by the owners often come equipped with mechanisms such as recipient rating and reviews. This lets owners vet recipients before renting their vehicle.

As well as this, P2P platforms make sure recipients are responsible for paying any applicable excess, should they cause damage to the vehicle, further protecting the owner. Both of these mechanisms encourage recipients to behave responsibly, thereby reducing the risk for all parties involved. P2P car sharing could become a more attractive option going forward as the very idea of car ownership loses appeal. Owning a car is likely to become more expensive and the use of car-sharing services is expected to almost triple to 18m users by 2025.

Insuring the sharing economy is complex, due to unique issues with regard to liability and the blurring of commercial and personal boundaries that the sector presents. As a result, the role of insurance in the sharing economy is still, to a degree, becoming established, but overall presents huge growth potential for insurers and brokers.

The gig economy

In the UK, 4.8 million (15%) of working individuals are said to be employed in the gig economy. The gig economy is so named because workers carry out jobs on an individual ‘gig’ basis. A worker does jobs in an ad hoc way and gets paid per job. Defining a worker within the gig economy is difficult. Loosely, they’re similar to independent contractors. As such, they need to obtain all necessary insurance because their employer might not cover them under their business insurance. Some examples of employers who employ workers in this manner are food delivery firms, taxi companies and other delivery services. Increasingly, gig economy workers are using their personal vehicles for commercial reasons. For example, certain delivery drivers use their own vehicles and get paid per delivery.

The gig economy is so fast-moving that traditional insurance might not be sufficient. In order to accommodate this different way of working, products may need to be designed that are more flexible. For instance, a delivery driver might only choose to work a day or two a month, but would have to purchase a whole policy (or at best, cover for a month), leaving them over
insured and out of pocket.

MotorTradeProtect

Interested in finding out more information about the changes to the motor trade industry, then check out another of our blog posts for more information on 3 questions to ask about your Motor Trade insurance.

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