Jose Heftye, Managing Director, Marsh & Robert Bauer, Managing Director, AIG
Crowd-based capitalism. Collaborative consumption. The 1099, gig, or on-demand work force. Call it what you wish, the sharing economy is here to stay. An exciting new way to live and work is available to those who wish to participate. Millions of us do. And we love it.
But what about insurance in this new world? We believe insuring sharing economy platforms and participants is one of the biggest puzzles the insurance industry will face over the next decade.
On one hand lies significant opportunity. To quantify, structure, and transfer risk by partnering with firms who may have significant insight about risk in real time is an insurance professional’s dream scenario. Trust is made more transparent. We could always rent a room in Bob’s house. But now there is a platform for Bob to tell us he’s willing to rent it, next weekend, at a specific rate. And we can see others who have rented from Bob tell us it’s not only safe, but that Bob cooks a delicious breakfast and is a great host. What can peer-to-peer rating systems tell us about risk?
On the other hand lie significant challenges. Pricing models are being constructed with loss history that is just beginning now. Some types of insurance remain highly regulated. Where the distinction between personal and commercial use of assets in the sharing economy is blurred, regulators view personal lines of insurance very differently than commercial.
In the end, we believe good partnerships, like those between brokers, insurers, and clients, will prevail.
Marsh and AIG are delighted to bring this joint perspective on the sharing economy to you. It is our attempt at putting many conversations together on paper. Our thinking evolves as quickly as the technology does. Please don’t hesitate to reach out and share your views. In the spirit of sharing, we’d love to hear from you!