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To address these new risks insurers must rethink traditional cover, the study by the two organisations finds.
Lloyd’s head of innovation, Trevor Maynard, commented: “Sharing economy platforms have transformed entire industries because they have rejected the status quo and challenged the way we think about once-traditional goods and services. To effectively serve the sharing economy, we as insurers must follow that example and rethink traditional insurance products.”
The study reveals that lines are blurred between whether consumers or service providers carry risk in the sharing economy. It concludes that the sharing economy is tricky to insure through traditional products because it “blurs the boundaries between personal and commercial lines”.
Lloyd’s and Deloitte say risk management is at an early stage of development in the vast majority of smaller sharing platforms. The study shows examples of established risk management programmes in place at more mature platforms but states that the insurance industry should work closely with platforms to support growth.
The study focuses on real estate and finance in six key markets – China, United Arab Emirates, Germany, France, the UK and the US. It finds that a quarter of the total population studied has bought or rented services from peers using shared platforms during the past three years. Lloyd’s and Deloitte say this equates to 500 million people sharing assets or services in these six countries alone.
The study finds significant variations between countries, with China emerging as the top market for shared economy services.
Lloyd’s and Deloitte find that 57% of people who had provided services or lent products in the sharing economy in the past three years were insured via transaction or personal cover. Existing protection for sharing economy risks includes loss of possession, liability and damage cover. The study finds that several platforms have protection in place, ranging from transaction-embedded insurance to guarantee schemes.
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