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Next for Insurtech: Product Diversity

As the sharing economy continues to evolve and the autonomous revolution emerges, consumers’ insurance needs are changing, requiring new types of coverage to ensure adequate protection against new risks.

Insurers have begun partnering with insurtech players to build the digital basics, streamlining the quote-to-issue lifecycle and positioning insurers to engage with the 73% of the market who are looking to purchase coverage online. Now, insurers are pushing partnerships to the next level, focusing on product diversity to meet the growing array of customer coverage needs.

Product Diversity Is the Way of the future

Technology has made astronomical leaps in the last two decades, taking society from a pre-internet world of engagement to an environment of connected devices and services. Service providers such as Zipcar and AirBnB have opened a new sharing economy, where individuals using web and mobile apps can share their personal services or amenities, such as a car or a home, on an as-needed basis.

The sharing economy, however, creates risks not typically covered under traditional policies.

See also: How Diversity Can Stoke Innovation  

According to New York Times article, AirBnB offers $1 million in liability coverage to hosts using its platform, but the coverage is secondary to the homeowner’s personal policy, where commercial operations are not usually covered.

“There are also other issues with Airbnb insurance,” said Robin Smith, CEO of WeGoLook, “including the fact that it does not provide coverage if a guest shows up early or stays late. This can potentially be disastrous.”

Risks like these are behind the growing demand for innovative product types. Accenture predicts a decline in the demand for personal auto, starting in 2026, but says that autonomous vehicles will net the insurance industry $81 billion in new premiums over the next eight years.

“Three new business lines — cybersecurity, product liability for sensors and software algorithms and public infrastructure — are going to drive billions in new insurance premiums for the U.S. auto insurance industry in the coming years,” said Larry Karp, global insurance telematics lead in Accenture Mobility, part of Accenture Digital. “Forward-thinking insurers are already putting these new products at the top of their agenda as they look to capitalize on the first-mover advantage.”

While future-thinking carriers may benefit from the autonomous trend, insurers that have not yet built the digital, D2C base will witness declining profitability as demand for key products falters.

“Right now, 70% of the market is asking to buy insurance online,” said Eric Gewirtzman, CEO, BOLT. “When you consider the impact of the sharing economy and the autonomous revolution on encouraging consumers to become technology-savvy, that number is going to grow.”

That puts direct-to-consumer distribution in a new light, making digital capabilities critical to gaining wallet share as well as share of market by supporting greater product diversity.

Why Digital Is So Important to Product Diversity

According to Rick Huckstep, industry influencer and editor on insurtech at The Digital Insurer, before the rise of the internet, insurers bought policy admin systems. Each product had its own core system costing millions of dollars and taking years to implement.

These legacy systems now stand in the way of insurers as they seek to strengthen channel and product diversity. “Engagement with customers and the development of products are defined by the limits of the policy admin system,” Huckstep said.

He then outlined a plan where insurers partner with insurtech players to rapidly adopt digital capabilities while using existing investments in IT. Direct-to-consumer channels of engagement put insurers’ products in front of more consumers and enable more efficient distribution, but partnerships in digital innovation also provide insurers with access to an unprecedented range of new coverage types without the need to take on additional risk or obtain their own carrier appointments.

According to Bain, insurers are leveraging new ecosystems. These synergistic partnerships build on an insurer’s digital foundation and allow insurers to deliver the products and services their customers want or need.

“With ecosystems, we see insurers offering more of the core products and ancillary services consumers require, such as home, auto, business, pet and travel or the ability to compare auto repair shops and book appointments online,” Gewirtzman said. “Making the consumer’s life easier leads to greater customer loyalty for insurers and is an important factor in remaining competitive in the current and future market.”

Overcoming the Challenges of New Product Innovation

To meet consumers’ growing demands for personalization, EY predicts that insurers will need to offer a wider portfolio of products. Digital, direct-to-consumer capabilities become a big part of this equation, giving insurers the opportunity to act in real time, identifying needs and recommending coverage options while the customer is in the act of buying.

According to Huckstep, “Digital speed to market has never been more important,” a statement that is particularly relevant for insurers currently selling exclusively through external agent channels.

See also: Reinventing Life Insurance  

For insurers still seeking a digital identity, insurtech partnerships allow them to leverage existing investments in IT, while making a rapid move toward D2C distribution.

Building on strong digital capabilities to offer products from an ecosystem of insurance carriers, a leading insurer improved quote conversion rates 4% over a single quarter. Another insurer sold 1.6 more of its own products every time it bundled a solution that included another carrier’s offering.

“It’s successful digital transformations and partnerships like these that prove the case for D2C and product diversity,” Gewirtzman said. “As additional insurers come on board, we’ll start to see more than a few carriers excelling at meeting customer needs. We’ll see an entire industry operating from a customer-focused perspective.”

What’s the role of product innovation and diversity in your customer acquisition and retention strategy?

Driverless Vehicles: Brace for Impact

On June 26, Waymo (Google’s autonomous car firm), signed a deal under which Avis Budget Group will provide “fleet support and maintenance services” to Phoenix-area Waymo vehicles. Waymo uses Chrysler Pacifica minivans to autonomously shuttle Phoenix residents around town. Its first fleet of 100 minivans quickly grew into an order for 500 more.

The Waymo/Avis agreement may only be a pilot, but the implications are enormous. Not unlike standard cab companies, Waymo realized that a fleet of autonomous vehicles would need cleaning and maintenance throughout the day and storage throughout the night. When practical matters like auto cleaning and storage become news enough for a press release, something big is going on.

Here are some fun facts:

  • According to USA Today, Avis’ stock rose 14% on the news.
  • The Chrysler Pacifica was chosen, in large part, because it could close its own doors. Waymo usage experts theorized that riders might often hop out and forget to close the door.
  • Within hours of the Waymo announcement, Apple likewise unveiled a deal where Hertz Global would manage its autonomous fleet.

Autonomous vehicles have picked up the pace of disruption over the last two years. What will life be like when the Autonomy of Things takes on many of our everyday behaviors or occupations, like driving? Will we be safer? Will we need insurance? Will auto manufacturers cover accidents via product liability? Who will cover bodily injury or property damage? How will risk products be changed to fit this new model? Is there an insurance right-road to surviving autonomy?

See also: The Evolution in Self-Driving Vehicles  

Is Autonomy Impact Still Underrated?

There has been a lot of talk and certainly a wealth of words written on the impact of auto autonomy, and safety is at the top of the concerns and promises of autonomous vehicles. Insurers are, of course, focused on how autonomous vehicles might cause a decline in the need for auto insurance.

The pace of development, rollout, experimentation and expansion of autonomous vehicles has far exceeded original expectations. In his blog, Peter Diamandis (XPrize Founder) noted that a former Tesla and BMW executive said that self-driving cars would start to kill car ownership in just five years. John Zimmer, the cofounder and president of Lyft, said that car ownership would “all but end” in cities by 2025.

The Wall Street Journal reported in July 2016 that auto insurance represents nearly a third of all premiums for the P&C industry, with projections that 80% could evaporate over the next few decades as autonomous vehicles are introduced, some of them replacing legacy vehicles and some created for shared transportation. At the same time, U.S. government support strengthened in September 2016 when federal auto safety regulators released their first set of guidelines, sending a clear signal to automakers that the door was wide open for driverless cars and betting that the nation’s highways will be safer with more cars driven by machines instead of people.

Those statements, among others, might cause some scrambling. Manufacturers are working frantically to partner with AI providers, cab services and ridesharing services such as Uber, Lyft and Waymo. Naysayers will note that rural areas will be highly unlikely to use autonomous vehicles soon, and it’s true that the largest impact may be in urban areas. But if car ownership were even cut by 5% by 2030, a tremendous number of auto manufacturers and auto insurers would be affected.

Autonomy and its insurance impact isn’t limited to personal autos. Truck company Otto is testing self-driving commercial trucks — a necessary automation that could help alleviate the growing lack of truck drivers. Husqvarna has several models of autonomous lawn mowers on the market. Yara and Rolls Royce are among companies working on autonomous ships. Case, John Deere and Autonomous Tractor Corporation have all been developing driverless tractors.

In nearly every one of these cases, there are safety benefits and disruptive insurance implications, but there are also revenue growth opportunities for those that think more broadly and “outside the box.” From developing partnerships with automotive companies to leveraging the autonomous vehicle data for new services, each offers alternative revenue streams to counter the decline of traditional auto insurance. The key is experimenting with these technologies to find alternative “products and services” and develop an ecosystem of partners to support this, before the competition does.

Share and Transportation as a Service — Insurers May Like

In our report, A New Age of Insurance:  Growth Opportunity for Commercial and Specialty Insurance in a Time of Market Disruption, we cite a report from RethinkX, The Disruption of Transportation and the Collapse of the Internal-Combustion Vehicle and Oil Industries, which says that by 2030 (within 10 years of regulatory approval of autonomous vehicles), 95% of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model called “transport-as-a-service” (TaaS). The report says the approval of autonomous vehicles will unleash a highly competitive market-share grab among existing and new pre-TaaS (ride-hailing) companies in expectation of the outsized rewards of trillions of dollars of market opportunities and network effects.

Welcome to the adolescence of the sharing economy and transportation as a service. Autonomy isn’t the only road for vehicle progress. Vehicle sharing is growing and will remain in vogue for some time. Just as Airbnb and HomeAway have given rise to new insurance products, Zipcar and Getaround and Uber have given rise to new P&C products.

At the same time, a merging of public and private transportation and a pathway to free transportation is in the early stages of being created in the TaaS model. This will shift risk from individuals to commercial entities, governments or other businesses that provide the public transportation, creating commercial lines product opportunities beyond traditional “public transportation.”

Vehicle users, whether they are riders, borrowers, sharers or public entities, are going to need innovative coverage options. Tesla and Volvo may be promising some level of auto coverage for owners of autonomous vehicles, but that kind of blanket coverage is likely to mimic an airline’s coverage of passengers and cargo — it will be limited. Those who lend their vehicle, through a software-based consolidator, such as Getaround, will need coverage that goes beyond their auto policy.

In the past few weeks, we’ve also seen how cyber attacks can undermine freight and shipping, not to mention systems. Nearly all of these service-oriented options will require new types of service-level coverage. Autonomous freight may be safer in transit, but in some ways it may also be less secure.

The lessons appear to be found in brainstorming. Technology is breeding diversity in service use and ownership. There will be new coverage types and new insurance products needed.

See also: Will You Own a Self-Driving Vehicle?  

Up Next … Flying Vehicles

Remember the movie “Back to the Future” and the Jetsons flying cars that were so cool? Well, they are quickly becoming a cool reality. A June 2017 Forbes article says flying cars are moving rapidly from fiction to reality, with the first applications of flying vehicles for recreational activities in the next five years. The article says that, in the past five years, at least eight companies have conducted their first flight tests, and several more are expected to follow suit, indicative of the frenzied activity in this space.

Companies such as PAL-VTerrafugia, AeromobilEhangE-VoloUrban AeronauticsKitty Hawk and Lilium Aviation completed test flights of their flying car prototypes, with PAL-V going further by initiating pre-sales of its Liberty Pioneer model flying car, which the company aims to deliver by the end 2018. This sounds like Tesla and its pre-sales move!

Not to be left behind … ride-sharing companies are aggressively entering the space. Uber launched the Uber Elevate program, with a focus on making flying vehicles transport a reality by bringing together government agencies, vehicle manufacturers and regulators. Google and Skype are entering the space by investing in start-ups: Google in Kitty Hawk and Skype in Lilium Aviation. Not to be left behind, Airbus has unveiled a number of flying car concepts, with plans to launch a personal flying car by 2018. Airbus also plans to build a mass transit flying vehicle…the potential next TaaS option.

So, it pays for insurers to keep their attention on autonomous vehicle trends … because it is more than the personal autonomous vehicle … it is the transformation of the entire transportation industry and will have a significant impact on premium and growth for auto insurers. As we recently found in our commercial and specialty insurance report, the transportation industry is rapidly changing and new technologies may be lending themselves to safety, but the world itself isn’t necessarily growing any safer.

Risk doesn’t end. Insurers will always be helping individuals and companies manage risk. The key will be using the trends to rapidly adapt to a shift to the new digital age. Insurers will need to understand and value new risks and offer innovative products and services that meet the changing needs in this shift during the digital age.

Insurtech’s Pay-As-You-Go Promise

Even though Metromile was groundbreaking with its pay-per-mile insurance, it certainly wasn’t the first to provide usage-based cover. In fact, the earliest documented paper insurance policy, a commercial policy, was a pay-per-use policy and was dated Feb. 13, 1343. It covered 10 bales of linen on their trip from Pisa to Sicily on the Santa Catalina —right in the midst of the Italian Renaissance.

Fast forward 673 years, and we are entering an era where usage-based insurance and pay-as-you-go (drive-live-travel-ship-and more) coverage is coming into vogue. The big difference with this Renaissance, however, is that technology and insurance coverage is unlikely to trend back toward aggregates and is highly likely to trend permanently toward individualized, contextualized, point-in-time-based, data and analytics based pricing and use. There’s no going back … only forward.

If the sharing economy with collaborative consumption expands, the on-demand model continues to grow and the pay-as-you-use model continues to create innovative options, then there are long-term, dramatic insurance implications — and almost all of them are positive when looked at in the light of insurtech advancements. So, let’s briefly consider what usage-based insurance means to consumers, what it will do for insurers and how insurers need to prepare their enterprises to take advantage of it.

The Consumer and the Economics of Pay-As-You-Use

Pay-as-you-use is a common economic principle, couched in today’s technology solutions. The only way it becomes profitable is for the consumer to see the benefit of variable use, the ease of use and variable expense. When Metromile introduced pay-per-mile coverage for drivers, it naturally appealed most to low-mileage drivers, who felt that they could now be treated fairly. They benefited from less-wasted premium dollars, and they were rewarded with a personalized experience that made them feel known. (Metromile even goes so far as to warn individual San Francisco drivers about potential parking tickets during street cleaning days.)

See also: Insurtech: One More Sign of Renaissance  

Today’s consumers have constructed, through their preferences, a digitally savvy, relationship-valuing, on-demand, sharing economy. AirBnB, Zipcar and Snapgoods are turning wasted downtime into productive uptime and revenue. These companies and others have transformed the mobile device into a powerful marketplace of options with stellar and simplified ease of use, standardized quality of service and transparency of price. These same trends will drive some consumers to only do business with those who can provide usage-based coverage.

The Insurer and the Economics of Pay-as-You-Grow

Insurers may lament that they are losing premium when the need for insurance is not in use, but that isn’t actually the case. In most cases they are just lowering premium at times when there is very little or no risk … the basic fundamentals of insurance. Insurtech startups are providing ideas to help insurers turn the sharing economy into new market opportunities, revenue and profits. Digital connectivity, relevant data streams and new product models will continually allow insurers to prove their pricing and help their customers lower their risk.

The irony of the insurer discomfort is this: Many insurers are taking advantage of the same pay-as-you-use principles as consumers themselves. They are sharing system solutions with cloud-based technology. They are paying as they grow, with agreements that allow them to pay per policy or pay based on premiums. They are using data on demand relationships for everything from medical evidence to geographic data and credit scoring. They use technology partners and consultants in an effort to not waste downtime, capital, resources and budgets. They are rapidly moving to a pay-as-they-use world, building pay-as-they-need insurance enterprises. This is especially true for greenfields and startups, where a large part of the economic equation is an elegant, pay-as-you-grow technology framework. They can turn that framework into a safe testing ground for innovative concepts without the fear of tremendous loss, while having the ability to grow if the concepts are wildly successful.

The Window of Opportunity

It’s open again. The window of opportunity is open to insurers that wish to prepare their business models, products, processes and systems to embrace the Pay-As-You-Go culture. In a recent Majesco Thought Leadership report on insurance consumers, we found that consumers are far more interested in receiving a fair price than they are in gaining the lowest price. We also found that across all generational groups, auto insurance based on miles driven showed that 30%-50% of the surveyed respondents were willing to look at Pay-Per-Mile auto insurance and a similar percentage were interested in on-demand insurance for a specific event, item or time of day across all generational groups and led by Millennials. Each of these jumped to 60-80% when the “swing group (those that could shift) were added.  (See The Rise of the New Insurance Customerfor more information.)

The statistics are stunning, considering that those respondents are all current insurance customers — willing to stay or switch based upon their feelings of fairness, service, value, and need.  Insurers that aren’t already preparing, need to prepare now … and quickly.  There is no question that the convergence of consumer opinion and the innovative business models and capabilities of InsureTech will either steer consumers toward an insurer or away from it based on the insurer’s ability to accept non-traditional, tech-enabled products.  Just look at the high interest and investment by reinsurers and venture capital firms in companies like Lemonade, Slide, Root and TROV … and the buzz and excitement their brands are generating in the marketplace.

Preparing isn’t terribly difficult, but it requires a look at long-held insurance assumptions … business model, products, processes, and systems that may be outmoded and built for a previous era and generation. How does a quoting engine handle a sporadic driver? How does a policy administration solution handle coverage that may turn on and off with a switch, or coverage that may only have a duration of two hours? Is an insurer’s data warehouse prepared to handle the data deluge of millions of telematic devices? For some insurers, these questions may seem like tall hurdles to jump over, but the answers are well worth the time and investment.

See also: 6 Charts on Startups, Greenfields, Incubators

InsureTech is proving its potential by fueling innovation and disruption to the insurance industry, through new technology startups … and insurance and MGA startups.  S&P even noted in a recent report that InsureTech has a complementary place in the traditional insurance world, despite remaining uncertainty in the industry about how it will function on a wide scale.  If you prepare for new insurance models, such as Pay-On-Demand, Pay-As-You-Use, or Pay-As-You-Need, you will be moving your organization toward the place where consumer needs, expectations and demands are heading — particularly with the new generation of Millennials and Gen Zs that are embracing digitally superb, on-demand, sharing economy options in all parts of their lives.

It is the dawn of the insurance renaissance. Digitally-connected, innovative and analytically-informed insurers will thrive there. Those who are determined to focus on the customer will grow there. Preparing your business and the underlying systems keeps the windows of opportunity open and the breeze of market potential flowing into a healthy organization.

connected

How to Insure the Sharing Economy

During the snowstorm that hit the East Coast in January, I took some time to clean up my office and read reasonably current newspapers and trade magazines. I quickly identified many opportunities for new insurance products, mostly around shared assets. For example, an article on Millennials and the sharing economy explained that (primarily young) people make money by sending selfies of what they are wearing every day to a website called CovetMe; they get paid based on the brands and looks they are sporting.

They Uber their way to work, school or social events (when did Uber become a verb?) as a driver or passenger; they use their subscription to a shared car service such as Zipcar to take occasional trips; or they get paid for allowing advertising on their own car by subscribing to companies such as Carvertise. FlightCar gives you free parking at big airports if you let other travelers use your parked car when you are traveling. Similar sharing activities take place with homes, clothing and accessories, occasionally used tools and equipment and even medical equipment.

All these shared assets need to be covered in different ways than the traditional, personal lines homeowner’s or car insurance policies. Occasionally renting out assets to third parties or shared ownership of one asset between non-family members creates a different risk profile than self-use only, both for property coverages and especially for liability.

Think about deductible coverage between multiple owners in case of a claim, good driver discounts or multiple non-familial owners getting involved in the same accident, as liable parties and as claimants. The insurance market has been pondering insurance solutions for the shared economy for a while now and found ways to cover Uber drivers or Airbnb landlords or offer non-owner car insurance. As an industry, however, we defaulted to our classical model of insurance and put a commercial coverage, bought by the shared economy company for their members,  on top of individual personal insurances where needed.

It works, but, as one can imagine, it is a bit clunky. Especially on larger claims, I expect delays and issues to occur concerning liability, wear and tear, acceptable use of assets and confusion around which policy should pay followed by subrogation. Now, most shared-economy companies have stated that they will reimburse their members for losses and will figure out later what is covered by which insurance. This is a good thing for their members, of course, but it doesn’t necessarily help insurers very much.

We should be able to do better and create truly new insurance coverages for the shared economy. For example, why wouldn’t an insurer work with one of the new tech companies that provides people with a cloud solution to document all of their assets with pictures, videos, sales receipts or warranty documents? Why wouldn’t an insurer create a comprehensive coverage for property and liability for all these clients’ assets, under the assumption that they will be shared? Tag the key assets with a sensor and learn from usage data. Use telematics data on the car use. Limit home rentals to one or two partner companies and learn from usage analytics.

Why wouldn’t a carrier try a pilot with a segment of young people with limited assets, in a single location?

I know that this is not a simple proposition and that, in creating these kind of coverages, many hurdles will be encountered. I do think, however, that the market is ready, and that the sharing economy will become a force to be reckoned with soon. So, we might as well figure out how to insure and service that force.

As my colleague Mark Breading stated in his recent research brief, Insurance in the Connected World: Observations on Opportunities and Threats, “Actively participating in the rapidly growing sharing economy will be critical for personal lines insurers. Asset ownership is shifting and requiring a different approach for managing and protecting the assets.”

It is not going to be easy, but customers will count on our industry to develop solutions to protect their shared assets. We have successfully been supporting changing economies and technologies for centuries now – I am sure we’ll also find a solution for the new sharing economy in a connected world.

A New Ride-Sharing Service Raises Even More Questions

The U.S. has seen an explosion in what is often referred to as the emerging “sharing economy” or “collaborative consumption.” In an increasingly connected society where most people have access to mobile communication devices, peer-to-peer services are springing up, based on mobile apps that consumers can use to access transportation services that historically have either not existed or were controlled by often highly regulated business or government entities.

One might argue that this is not a new concept, given that hitchhiking has been around since not long after the wheel was invented and was quite common in the 1950s and 1960s until it fell out of vogue as its inherent dangers gained more attention from the media and increasing numbers of consumers owned or had access to automobiles or mass transit.

But what we’re witnessing today is a relatively new phenomenon. Uber, Zimride, Lyft, ZipCar, Turo, GetAround, TaskRabbit, JollyWheels, RentMyCar, Zilok, CityCarShare, bla, bla, bla, bla, bla….

Which brings us to BlaBlaCar, the latest incarnation of car sharing. Founded in France in 2006, BlaBlaCar now claims to operate in about a dozen European countries and is exploring expanding into other countries, such as India and Brazil. BlaBlaCar bills itself as a “ride sharing” mechanism, as opposed to “car sharing.” That falls somewhere between fee-based hitchhiking and a somewhat irregular share-the-expense car pooling arrangement. Details on how the system operates can be found at the company’s web site.

BlaBlaCar currently does not operate in the U.S. There is some question as to whether it can be as successful in the U.S. as it claims to be in Europe. Owning and operating a vehicle in Europe is far more costly than it is in the U.S. There is also a perception that Europeans may be more trusting of, or accustomed to, riding with strangers than Americans are. In addition, there are social issues to consider in the U.S. For example, a BlaBlaCar driver can refuse to transport particular passengers. If such a driver is white and a declined passenger applicant is black, would there be civil rights issues that could be addressed by claims or suits for discrimination?

The question addressed by this article is, if BlaBlaCar were to begin operations in the U.S., would the personal auto insurance policies of its drivers cover this type of activity? According to the terms and conditions on BlaBlaCar’s web site and media articles about their service, most auto insurance in Europe covers this exposure because there is no “profit” involved. The passenger fee is referred to as a way to share the cost of a trip. The terms and conditions include a stringent hold-harmless provision and a liability cap to protect BlaBlaCar.

However, the company’s position on how personal auto insurance responds in Europe would be immaterial if it were to commence operations in the U.S. Many, if not most, personal auto policies in the U.S. may exclude BlaBlaCar activities regardless of whether a “profit” is sought or made. The decision could depend on the facts of each situation and the exclusion wording in the policy. The first question is whether there can be assurance that a driver is not making a profit. Second, the policy language may not consider profit to be an issue. For example, these are the two most common exclusions found in U.S. personal auto policies:

  • We do not provide liability coverage for any “insured”…for that “insured’s” liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance. This Exclusion (A.5.) does not apply to a share-the-expense car pool.
  • We do not provide liability coverage for any person…for that person’s liability arising out of the ownership or operation of a vehicle while it is being used to carry persons or property for a fee. This exclusion (A.5.) does not apply to a share-the-expense car pool.

This language is taken from two different edition dates of the “ISO-standard” personal auto policy. In the case of use as a “public or livery conveyance,” ISO’s filing memorandum stated that the intent of this exclusion is to preclude coverage for vehicles available for “hire” to the general public for the transportation of people or cargo (e.g., taxis, sightseeing vans and package delivery services). The exclusion is not contingent on the profitability of the person or enterprise holding their vehicle out to the general public for hire.

In the case of a vehicle used to “carry persons or property for a fee,” there is no mention whatsoever of whether this fee generates a profit for the owner/driver. In one case, this exclusion was held to apply to someone who used his pickup truck to transport a friend’s son’s belongings to college in exchange for gas money.

However, both exclusions admittedly exempt a “share-the-expense car pool.” So what is meant by a “car pool”? One dictionary definition describes it as: “an arrangement between people to make a regular journey in a single vehicle, typically with each person taking turns to drive the others.”

Note the reference to “regular” and alternating as drivers. On the other hand, Wikipedia’s discussion of the term “carpool” implies a potentially broader concept that could include how BlaBlaCar operates. This muddies the water to the point that no blanket statement can be made about how U.S. personal auto policies might respond to claims arising from BlaBlaCar and similar ride-sharing services. If this were to become a significant exposure, one might expect U.S. insurers to define “car pool” in a way that precludes coverage for these services.

In the past year or two, we have seen various forms of “car sharing” exclusionary endorsements introduced by ISO and individual insurers, though many of them still do not fully address the “share-the-expense car pool” situation. The only conclusion we can reach at this point is that how a vehicle is being used and how that use fits with an insurance policy’s insuring agreements and exclusions are becoming much more important and more difficult to determine.

The insurance industry is not known for its innovation nor its ability to respond quickly to emerging social changes. The usual reaction is to exclude an unanticipated exposure until the industry can reasonably measure and predict the risk of loss. The growth of car- and ride-sharing (not to mention home-sharing) is something that will need to be closely monitored by the industry.