His appearance before a Congressional Committee alongside an Uber driver, a Thumbtack executive and the President of The Internet Association, was a strong statement in itself. But Robert Passmore, AVP of personal lines at the Property Casualty Insurers Association of America, also made some bold assertions during his testimony about the role of the insurance industry in the sharing economy.
“PCI members are at the heart of the sharing economy, creating and providing new solutions for businesses and consumers to protect their personal and financial safety,” Passmore declared. “While innovators in the sharing economy have designed new ways of using new technology to improve business models, insurers have been innovating new ways of providing protection for centuries and will similarly in the future be the grease that will enable the sharing economy to evolve, thrive and provide maximum benefits to consumers and businesses.”
According to Celent senior analyst Mike Fitzgerald, insurers are able to deliver the innovations that provide the “grease” Passmore describes because of two types of technology—the micro and the macro.
On the micro side, technologies such as auto telematics and mobile apps allow insurers to capture important insights into the behavior of individual insureds. A classic example of this is the type of coverage MetroMile provides to Uber drivers. By differentiating between personal and Uber drive-time, MetroMile allows a single vehicle to be appropriately covered by two distinct use-appropriate policies.
On the macro side, these same technologies enable insurers to gather massive volumes of data to which they can apply analytics that enable them to rate and price policies much more accurately.
Fitzgerald illustrates his point by considering church insurance, which is often based on the assumption that the physical facility is primarily used only on Sundays and Wednesdays. As churches increasingly seek to monetize their facilities by sharing them with outside groups, however, this kind of “spitballed” rating makes less and less sense.
Instead, Fitzgerald suggests, insurers may start capturing IoT (Internet of Things) telemetry such as doors opening and closing, lights being switched on and off, and thermostats being turned up and down on a large scale. Based on this telemetry, churches with a certain pattern of use can be compared with large numbers of other churches.
“The net result is an accurate utility pricing model that allows churches to pay as they use—rather than guessing at an annual use and an appropriate annual premium,” says Fitzgerald.
It’s also worth noting that insurers themselves can themselves make use of the sharing economy to streamline their own operations. WeGoLook, for example, provides inspection services through an app-enabled network of independent agents knows as “Lookers.” While Passmore was testifying before Congress, WeGoLook was announcing a recruiting drive in Kentucky, driven in large part by new contracts with insurance companies that operate in the state.
“There is possibly no group of professionals more leery of strangers performing tasks on their behalf than the highly regulated insurance company,” observes WeGoLook CEO Robin Smith. “But these companies are replacing field assignment agents with qualified ‘Lookers’—because a crowdsourced order-on-demand system just makes so much more sense.”
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