Brokers are well placed to use their understanding of customers to combat underinsurance, chief executive adds
Insurance2025: With the Covid-19 pandemic accelerating the rise of the sharing economy, there is a significant opportunity for collaboration between insurtechs and brokers, according to Louise Birritteri, Pikl’s chief executive.
Speaking during Insurance2025, Insurance Times’s three-day conference last week, Birritteri told online delegates: “Many insurtechs like Pikl are trying to use technology to significantly enhance the customer experience. That is something that should be useful for brokers.
“Insurtechs are often driven by [a] deep understanding of the needs of the customer. The new technologies they have created can allow flexible product development and rating structures, again to find the best deal at the right price.”
The move towards a sustainable way of living, as well as evolving technology, has created a “perfect storm” for the rise of the sharing economy, which is described as a socioeconomic system built around the sharing of resources, such as goods and services.
The sharing economy is forecast to grow in value - Birritteri cited a report from 2015, Sharing or paring? Growth of the Sharing Economy by PricewaterhouseCoopers (PWC), which estimated the total transactional revenue of the sharing economy to be worth £140bn in the UK and $335bn globally.
This equates to an insurance market that could be worth £30bn in the UK and £70bn globally.
According to Birritteri, Pikl’s 2019 home sharing market research revealed “substantial underinsurance” as the majority of UK insurers said they did not cover home sharing within standard insurance policy wordings.
“However, none of them asked ‘the question’ to identify people doing home sharing,” she added.
Meanwhile, Pikl also found that 93% of insurers said they would void or cancel customers’ policies if they were found to be home sharing - 39% would do so with immediate effect, although 54% said they would provide a 30-day grace period.
In addition, 80% of insurers admitted they would not pay claims if the customer had been home sharing and this was discovered at point of claim, unless the customer was found to be vulnerable.
Pikl also revealed that less than 30% of Airbnb hosts had actually told their insurance companies they were home sharing.
Birritteri continued: “There was a really big gap in expectation in what people operating in these parts of the sharing economy market think is happening with their insurance and what insurance companies and brokers actually think is happening.”
She pointed out various liability issues where properties had been trashed, hijacked, or where accidents had happened.
“Therefore, it’s really important that these areas of underinsurance are identified. Brokers are really well placed to understand their customers’ needs and identify these underinsurance issues,” she added.
Pikl offers two flexible products to address this gap – a top-up insurance for individuals that covers short-term commercial usage, like home sharing, which works alongside existing insurance policies; and a portfolio insurance product for platforms. This covers listings on a booking platform or the portfolio of a property manager in a single, standalone policy.
To create these solutions, the insurtech collaborated with the insurance market. An example of a market solution is Noiseaware, which can help identify whether a party is taking place at the property.
Pikl can also collaborate with a broker’s ecosystem, so that products do not invalidate the underlying insurance policy.
This allows Pikl to work more collaboratively and provide additional services as well as insurance - for example, identifying bookings that are high risk. Pikl can then communicate with the property manager so that they can take further action, like identity checking.
“It also helps from an insurance perspective to try and prevent a claim from happening. Equally the integrations that we have done also [allow] us to work with a variety of different Internet of Things (IOT) devices. We are currently exploring a number of those at the moment,” Birritteri added.
Birritteri gave Airbnb as an example of “leading the way” for the sharing economy, as it allows for greater access to properties anywhere.
She said: “The ‘belong anywhere’ mantra has moved to work anywhere’. As we have all seen from the last year, homeworking has really taken off and more people are thinking ‘can I live in a more flexible way? Or work remotely rather than always having to be in an office?”
Last year, she said the average Airbnb stay changed from being about five nights on average to being around 21, as people were taking the opportunity to holiday and work at the same time in a different location to their normal home.
Referring to the aforementioned PWC report, she highlighted that 60% of people are keen to work from anywhere. Birritteri said this could result in “diversified tourism”.
“It is unlikely that we are going to see travellers going to the usual tourist cities. It’s likely they will be moving into more rural settings where they can experience a different kind of living and that will help the work move to a more sustainable tourism approach,” she said.
However, Birritteri said there could also be a rise in subscription living, which she described as a digital nomad that does not have a fixed location that they live in – this is increasingly common among generation Z and millennials. This is because these two demographics are part of “generation rent” because they are unable to buy properties.
“The same is true of shared mobility. A vehicle is the second most expensive thing that people have next to their home. Increasingly people are evaluating whether this is a necessary expenditure,” Birritteri said.
She pointed to an increase in platforms providing access to shared mobility or usage-based insurance.
Therefore, property and vehicles being used for multiple purposes - both personal and commercial - usage leaning towards more short-term durations, access to vehicles overpowering ownership and consumers expecting all this to be connected to insurance is driving a “changing market dynamic” for the insurance sector.
“Traditionally the insurance market worked in a very separated way, for example people would go buy a vehicle and then insurance. Whereas if you are accessing a vehicle to use, it needs to have [a] fully integrated insurance service, Birritteri continued.
“All of the these provide obstacles that the insurance market would need to overcome, but they also provide opportunities in terms of how new propositions could be developed in order to increase customer experience and integration with insurance companies.”
Insurance2025: On Demand Sessions, 2021
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Louise Birritteri: Post-pandemic sharing economy rise is opportunity for insurtechs and brokers