With lockdown easing, the sharing economy may be able to recoup some losses, but at the same time new risks and property exclusions have emerged

With travel plans halted, closed borders, cancelled flights and tourism taking a nosedive, the Covid-19 lockdown has thrown a major spanner in the works for the sharing economy. 

This is especially the case for the short-term rental and Airbnb market with spring bookings dropping by 90%, which has prompted some insurtechs like Pikl that insure this sector to refocus business and innovate.

For example in May, Airbnb slashed 1,900 jobs and was forced to raise emergency funds as it announced that it was partnering with reputable travel insurance aggregators and insurers to ensure guests safety and working to educate guests about the value of insurance.

It also set aside $250m to help support army of 700,000 hosts, as well as launching its own extenuating circumstances insurance policy, to allow hosts and guests to cancel eligible reservations without a charge. 

Bookings in some cities fell by 96%, according to analytics website AirDNA. Brian Chesney, chief executive at Airbnb said: “In this crisis, it felt like I was a captain of a ship and a torpedo hit the side of the ship.”

Still as lockdown eases, there are also other issues to contend with such as the risk changing post-lockdown for some, consumers being more cautious about sharing accommodation to mitigate infection as well as possible exclusions for liability arising from contracting the virus on premises. 

But hope is at hand with the tourism sector earmarked to open in July in the UK, and those that insure the sharing economy are hoping to recoup losses. 


Louise Birritterri, founder and chief executive of insurtech Pikl is just one of the specialist insurers that have had to refocus business.

“We are monitoring the changes closely to understand if this gives rise to any implications for insurance. Equally, there is much talk across the insurance market about how, and if, exclusions for liability arising from Covid-19 transmission can be managed and, like many, we are reviewing our wordings and discussing this with our partners.

”I expect this will need to be refined over the coming months and years as we see the outcome of cases tested in the courts,” she told Insurance Times.

She said that when the market first went into lockdown, there were concerns from second home-owners about leaving properties unoccupied for longer than 30 days, breaching the terms of their insurance.

“Equally, with many people working from home, most home insurance policies do not allow for home working.

”Fortunately, the insurance market got together to relax these rules and guidance was issued by the Association of British Insurers to reassure the public they would not be penalised with their insurance policies due to the lockdown,“ Birritteri added.

On top of this, she said reopening safely is also a challenge.

“Cleaning is a hot topic presently, with the industry working with government bodies like Public Heath England on the standards which should be in place for short term rentals.

”The industry is responding very well to this and we think it will lead to an increase in standards and professionalisation across the market which will likely stay for the long term,” she added.

Birritterri is hopeful she can recoup losses as well as refocusing by launching new lines such as motor. 

Airbnb’s extenuating circumstances insurance policy 

Reservations for stays and Airbnb experiences made on or before 14 March 2020, with a check-in date between 14 March and 31 July 2020 will be covered, and may be cancelled before check-in. 

Guests who cancel will have cancellation and refund options, and hosts can cancel without a charge or impact on their superhost status. 

It is intended to protect guests and hosts from unforeseen circumstances that arise after booking. 

Coming out the other side

Despite the initial effects of lockdown being felt through a visible reduction in bookings in the market and subsequently insurance, others have followed suit and refocused business.

Merilee Karr, chair of at Short Term Accommodation Association (STAA) and chief executive of Underthedoormat told Insurance Times that the Covid-19 crisis has had a huge impact on tourism and hospitality even though it is a “once in a generation” event.

“Our view is that the coronavirus crisis will refocus our sector on the heart of the sharing economy.

”It has always been about offering space for use when it would otherwise sit empty. The few landlords who entered the sector might now go back to focusing more on long-term lettings while developers might use the short-term rental sector to help fill units that they are struggling to sell.

“We also believe that short-term business and leisure stays will return so, as a sector, we are preparing for that with the launch of the new STAA Covid-19 cleaning and safety standards and our promotion of the Quality in Tourism Safe, Clean and Legal accreditation scheme for property owners and management companies to sign up to, that will provide an independent, professional inspection adding greater consumer reassurance and protection for prospective guests.”

At the end of May global booking rebounded by 127% according to a report from AirDNA. 

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Source: AirDNA, 2020

Demand for flexible policies

Karr added: “One learning from this crisis for the insurance sector is that there will be a demand for more flexible and innovative new insurance policies to protect companies against future outbreaks and travellers for the disruption that this has caused.

“Companies in our sector will be looking for these types of products to protect their incomes and businesses and to ensure their customers are protected from unforeseen risks and cancellations.”

During lockdown, the STAA launched an NHS Homes Scheme to make use of empty homes that were empty, offering them for free to NHS staff so that they could stay near to hospitals and minimise any risk of infection spreading to their families.

In total it has over 2,500 properties across the UK for NHS workers and it has delivered £17m worth of stays.

It has also been offering a vital source of safe accommodation for people who need a place to stay for essential reasons.

This has allowed the sharing economy to take bookings for self-contained properties, for example in instances where people could not return safely to their own country, construction and NHS workers that need to stay close to sit or cancer patients receiving treatment.

It also provides a solution to the 14-day quarantine period imposed by the UK government post Covid-19 infection.

Read more…Coronavirus social distancing measures hits gig economy as service demands rise

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