The sharing economy is not fully served by the insurance business proper now, but the opportunity is there, Paul Kovacs, founder and govt director of the Institute for Catastrophic Loss Reduction, stated on Thursday on the CIP Society Symposium 2017.
Kovacs, who is additionally a analysis guide for the Insurance Institute of Canada (IIC) and the president and CEO of the Property and Casualty Insurance Compensation Corporation, was talking about his new analysis report titled Sharing Economy: Implications for the Insurance Industry in Canada. The report is the third within the IIC’s rising points analysis sequence.
“There’s a real opportunity for our industry now and it’s just going to grow over time and we’re underservicing it right now,” he advised attendees to the symposium, held on the Toronto Region Board of Trade. “I see this primarily as an opportunity.”
As an instance, Kovacs urged that insurers might companion with innovators within the sharing economy area. In the report, Kovacs additionally issued 10 suggestions for the insurance business to “better serve sharing platforms, providers and consumers” and to “better manage competition from insurtech and peer-to-peer insurance providers.” Among the suggestions for the business:
- Work with regulators to make sure that the “supervisory system” higher helps innovation and suppleness by insurers to serve the wants of sharing suppliers whereas additionally defending the general public;
- Prepare a “sharing economy readiness assessment” to establish how the business will develop merchandise, and select wording that most accurately fits the unconventional wants of sharing suppliers;
- Partner with different stakeholders, together with sharing organizations and governments, to higher doc the present and anticipated future state of the sharing economy in Canada;
- Monitor and report on developments within the sharing economy in different jurisdictions world wide, together with the supply of insurance and applicable regulation of the sector; and
- Prepare to answer the direct challenges new rivals will direct towards established business practices, together with plans to immediately problem false statements.
“This is a critical time for the Canadian insurance industry to become involved in the discussion about the sharing economy,” the report burdened.
During his presentation, Kovacs additionally emphasised the function of belief because the “foundation” for the sharing economy and the “sense that there is eroding trust in large government and increasing trust in peers. You have somebody willing to offer something, somebody who wants it and you believe it is going to come together: ‘I’m going to send you some money now and I expect to be able to stay in your place.’ It’s hard to believe how far it’s come in terms of the trust that is supporting the sharing economy.”
What is unclear, Kovacs urged, is the place the insurance business matches into the equation. “Does that mean people trust us more or trust us less?” he requested.
The report did say that the enlargement of the sharing economy will “likely challenge the reputation of the insurance industry, including criticism of traditional insurance practices and behaviour. When peer-to-peer insurance companies enter the Canadian insurance market, they are expected to promise simple products, transparent processes, lower prices and customized coverage relative to established insurance providers. Criticism may erode consumer confidence in existing insurance providers.”
But regardless of the speedy enlargement of the sharing economy, Kovacs advised symposium attendees that in his analysis, he was “very surprised” to discover a minimal quantity of public knowledge surrounding the subject. “There is no one who has actually tried to count how many Canadians are participating in the sharing economy, how many are providers, how many are users, etc. – certainly no government sources to get this sort of information,” he stated. “And an insurance industry that prides itself on having an actuarial data foundation for our practices, not having much data makes it really hard, so there is really little public data. I only found one report worldwide that tried to take account into how large the sharing economy is now and how large it might be 10 years from now.”
In that 2014 PwC report inspecting 5 sharing economy sectors – ridesharing, homesharing, music/video streaming, on-line staffing and peer-to-peer finance – the researchers predicted that the 5 sectors would expertise a progress in income from US$15 billion in 2014 to US$335 billion by 2025.
Despite the dearth of publicly obtainable knowledge, Kovacs stated that he discovered the proof “overwhelming” that the sharing economy is truly fairly frequent. “People are involved in very large scales in Canada, even if it’s not properly counted,” he urged. “In 10 years from now, there’s going to be a lot more Canadians.”
Another facet that is not that clear is the function of regulation within the sharing economy, with some seeing it as a “huge threat” and others as an enabler of the know-how. “Regulation is an incredibly hot topic within the sharing community as they debate what proper regulations should look like,” Kovacs stated.
Kovacs spoke throughout a symposium session known as Social/Sharing Economy: Implications for the Insurance business in Canada that additionally featured presenters Karim Hirji, senior vice chairman, worldwide and ventures, with Intact Financial Corporation and David McGown, senior vice chairman of strategic initiatives with the Insurance Bureau of Canada.
More protection of the CIP Society Symposium 2017
Satisfying unmet buyer wants key to serving to stop disruption: CIP Symposium speaker