The sharing financial system is forcing the insurance coverage trade to throw their cookie-cutters away. Imagine a home-owner shopper who decides to run a small restaurant enterprise from their property. The home would keep its private insurance coverage exposures, however the chef and the restaurant exercise would carry industrial insurance coverage exposures. Insurance brokers of the long run will more and more must cook up custom solutions to take care of such an intriguing recipe of dangers.
As clients just like the home-owner/chef embrace the ever-growing sharing financial system, they’re searching for insurance coverage companions who can discover solutions to switch their danger and provide stability and peace of thoughts in very untimely markets. This is a good alternative for brokers to thrive, based on Drew Johnson, managing director at Northfield Brokerage Solutions, an extra and surplus (E&S) traces division of Travelers.
“There’s no cookie-cutter approach to sharing economy risks. You can’t just categorize a risk as X and offer solution Y. You have to understand a customer’s entire risk portfolio and come up with a creative solution around it,” Johnson advised Insurance Business on the WSIA Marketplace in Atlanta.
“If you take the homeowner/chef example, the chef might also be serving liquor as part of the commercial service. The customers might be bringing wine on to the premises themselves, or the chef might be serving wine, which creates a liquor liability exposure within a home. Each risk and each account is unique and requires a different custom solution.”
The E&S market is rather well positioned to react to the sharing financial system due to its modern DNA, based on Johnson. It has been the incubator for decent new merchandise like employment practices legal responsibility insurance coverage (EPLI) and cyber insurance coverage, and it’s prone to play a key position in cooking up sharing financial system insurance coverage solutions.
“Because the sharing economy is new and is evolving all the time, there are likely going to be claims, so brokers and end-customers will be looking for carrier partners with effective and efficient claims handling capabilities like Travelers,” Johnson commented. “These are leading edge insurance policies, so when a buyer has a declare it can seemingly be one thing we’ve by no means seen earlier than, which is why it’s helpful to have a robust stability sheet to leverage.
“As the sharing economy is such a custom business, I think a lot of opportunities will fall in the brokerage space and brokers will have to be creative. The risks will continue to evolve, and we will need to come up with new products as an industry.”