January 18, 2017
A New Way of Thinking on Assets
Instead of owning assets, people are increasingly electing to merely access them -- and that's just the beginning of the story for insurers.
“When it comes to assets, a growing number of people are increasingly satisfied with having access to these assets, rather than owning them.” — Transpay.com
There is no doubt that the hot topic for 2017 and beyond will be the growth of the so-called sharing economy.
The reason for this growth is simple: Instead of owning assets, people are increasingly electing to access them.
But that’s not the end of the story.
Exacerbating this access over ownership mentality is the rapid growth in mobile technology. This allows online platforms, like WeGoLook, to use powerful mobile apps to facilitate the new emphasis on access.
The idea of owning assets, popularized by the consumption habits of baby boomers, is now slowly losing its appeal.
The assets you do own can now work for you, and ultimately earn you supplemental income.
And people are comfortable with this. A recent PwC study found that 60 percent or people believe the statement that “access is the new ownership.”
What implications does this have for insurers?
Great question. But first, let’s discuss the idea behind the sharing economy.
Access to Assets?
The concept of access over ownership, also known as collaborative consumption or the access economy, is simply the idea of sharing resources.
Due to advances in mobile technology, sharing assets (homes, cars, labor, consumer items) is structured through the use of online platforms and mobile apps (Uber, Airbnb, WeGoLook, etc.).
The sharing economy allows consumers, and businesses, the opportunity to use assets on an as-needed basis instead of purchasing and managing them.
Is Sharing Better Than Owning?
It’s certainly becoming more popular.
A recent survey found that 72 percent of adults are expected to participate in the sharing economy over the next two years.
Further, PwC estimates that by 2025, the sharing economy will be a $300 billion dollar industry.
So why are people choosing to access rather than own?
The Downsides of Ownership
While owning assets may portray some degree of success, prestige, and affluence, it also means depreciation, maintenance, and storage.
Depending on the asset — boat, fancy car, vacation property, etc. — you have to use that asset frequently to make it worth its value.
That’s massive underused capacity and waste!
Think of something expensive you bought years ago that you’ve used a fraction of the time?
Yea, we are all guilty of this!
But fortunately, people are changing their ways.
A study by Frost & Sullivan estimates that the number of participants in car-sharing ventures in North America will rise to 9 million by 2020.
Considering that almost any asset can be shared, the possibilities are endless.
Can the Insurance Industry Jump On Board?
Many have argued that the insurance industry needs to innovative its old business practices.
Whether or not they’re right, there is some truth to the idea that all industries need to adapt to the sharing economy phenomenon.
Insurance carriers have already experienced the massive shift to mobile tech with the insurtech revolution. Now, the consumption emphasis on access is gaining momentum.
Here’s a statistic to blow your socks off: 90% of millennials don’t have insurance.
This should be a siren song to insurance industry insiders. There is a huge gap that needs to be filled!
See also: What Millennials Demand as Customers
These companies are embracing access, and are killing it!
Insurtech as a whole has attracted more than $5 billion in investment since 2011.
On the policy side of the equation, similar rethinking needs to occur.
Since consumers are increasingly electing to share their assets instead of owning them, traditional insurance packages don’t apply.
Indeed, many insurers have developed niche specific policies for ride-sharing, car-sharing, and home-sharing. But, many have not.
Rising to the Challenge
The truth is, the sharing economy and its emphasis on access can no longer be an afterthought.
The sharing economy demands a fresh look at the traditional way risk management and insurance packages are offered to consumers.
As more consumers access goods and services online, an exciting challenge and opportunity are presented to insurance companies.
How will you react?