Risk & Business Magazine Cain Insurance Risk & Business Magazine Fall 2017 | Page 31

THE SHARING ECONOMY
“Trust that people once had
in corporations is shifting to
increased trust in peers.”
be made, reducing service costs.
Millennials are also looking to increase
the utility of the purchases they are
making. Most drivers’ vehicles remain
unused for 95 percent of the day. Uber
drivers have increased the utility of
their vehicles by turning them into
business ventures. Similarly, Airbnb
has encouraged homeowners to provide
accommodations to travellers by
using their vacant cottages or empty
bedrooms in their homes. For the
service provider in each case, there is
a relatively low commitment as both
the Uber driver and the Airbnb host
are given the autonomy to choose who
they provide their respective services to
and when. The convenience of online
platforms to organize these transactions
has also helped these businesses grow
into the multibillion-dollar companies
that they are.
WHERE ARE THE GAPS?
The sharing economy presents insurers
and insurance brokers with new
challenges. Most standard motor vehicle
insurance policies do not address the
situation in which drivers use their
personal vehicles to transfer passengers
for a fee as independent contractors.
Because Uber drivers are not employees
of Uber, they are not subject to the
same government regulations as taxi
drivers. Similarly, Airbnb has presented
a problem for home insurance policies
as most do not account for situations
where space in a home has been
rented to strangers for short-term
accommodation.
The insurance industry will need to
adapt more quickly to these economic
trends. Homeowners and vehicle owners
are already taking advantage of the
business opportunities presented by
the sharing economy, but they ought
to be able to do so without exposing
themselves to unnecessary risk.
Moreover, Uber passengers and Airbnb
guests must also be protected from risk. that it has set up a sharing economy
advisory committee to look at policy and
regulatory and legislative changes that
will need to be made to fill in the gaps
presented by companies like Uber and
Airbnb.
HOW HAVE INSURERS BEEN AFFECTED
BY THE SHARING ECONOMY?
Provincial insurance regulators have
been cognisant of the gap in insurance
coverage presented by Uber. Provincial
insurance regulators in Alberta, Ontario,
and Quebec have attempted to fill
this gap with “blanket fleet coverage”
provided by a major Canadian insurer.
This blanket fleet coverage offers
insurance protection to Uber drivers,
passengers, and vehicle owners from the
moment the Uber app is turned on to
when passengers exit the vehicle. There will be many changes to
insurance contracts over the next few
years, which will open opportunities
for insurers and brokers alike. We can
expect some of these changes to be
legislated and others to be a natural
adaptation to the emergence of the
sharing economy. Insurers will need
to consider how to market themselves
to this emerging industry. Insurers
hoping to provide policies that provide
coverage to Uber and similar ride-
sharing companies will want to look
to the demographics of urban drivers
and passengers. Airbnb will not need
to focus on urban demographics so
much, but it will want to look at the
demographics of Airbnb guests in
general and what their accommodation
needs and risks are.
The insurer’s policy provides coverage
that includes statutory accident benefits,
uninsured motorist coverage, and third-
party liability of up to CAD 1 million
while the app is in use but no ride has
been accepted; this coverage increases
to CAD 2 million after a ride has been
accepted. Under the policy, collision
and comprehensive coverage apply if the
vehicle owner has this coverage under
his or her own personal motor vehicle
policy.
HOW WILL THE SHARING ECONOMY
AFFECT INSURERS MOVING FORWARD?
No similar regulatory changes have
been announced to address the gap in
coverage presented by Airbnb, although
it is only a matter of time. In Ontario,
the government has announced that it
is working with the insurance industry
to modernize the automobile insurance
system. Ontario has also announced
HELPFUL HINTS FOR THE AIRBNB/UBER
USER
The sharing economy also presents
new challenges for the users of Airbnb
and Uber. No longer can one assume
that their actions are automatically
covered by standard insurance policies.
Users of Airbnb and Uber ought to
have meaningful discussions with their
broker or insurer to ensure the peace of
mind of coverage. +
+
Steven Barnett and Tricia Parker work at
Foster & Company.
fosterandcompany.com/en
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