As an industry, insurance has always been able to adapt to changes in society, legal requirements, technology and, sometimes, all three. Ride sharing is a perfect example of that agility. As I brought up in my first blog, ridesharing programs such as UberX and Lyft that do not leverage licensed livery drivers are putting the passenger, the driver and the public at risk because personal lines auto policies explicitly exclude livery activities.
Legislatures and insurers have begun to respond to this new wrinkle in the auto industry but the response has not been uniform nor does it cover all jurisdictions – another example of how it takes time for a uniform solution to work itself out (if it ever does). Uber itself has partnered with Metromile to provide a paid option for insurance in three states. Farmers and USAA (through endorsement) have launched programs in Colorado, Erie has launched a new product for Indiana and Illinois, and Geico has launced a product in Virginia, all indicating that coverage hasn’t been defined by the industry as a whole and coverage isn’t available across the US, much less internationally. There are also anecdotal stories about insurers cancelling policies once it was discovered an insured was driving for a ride-share service, which is not surprising considering the livery exclusion.
Adding to this, regulations in each jurisdiction must also be addressed. Thirty-five states are addressing this issue in some way. It appears that most states are treating rideshare programs as TNCs (Transportation Network Companies) with higher insurance limits and specific language, similar to the California approach recently enacted. Without regulatory change, the insurance industry will be in the quandary of insuring what is essentially an illegal activity since Uber-X and Lyft drivers are not licensed livery drivers and, in most regions, they are therefore picking up passengers illegally.
While it will take ridesharing time to mature as a concept and coverage within the industry and legislation, it’s an indicator for the capabilities that insurers need to be able to be responsive in the marketplace: there is no connector to these bullet points-we need a bridge here.
- Development – one thing I’ve heard in speaking with insurers across lines of business on a regular basis, is that getting new products to market, or even coverage changes to existing products, is a daunting task. With complex systems and architectures most insurers have a very difficult time launching new products. Insurers are concerned about missing new opportunities. As an industry, insurers need a better way to define and develop products – preferably without having to update multiple systems across the insurance landscape.
- Deployment – launch of a new product generally entails a significant amount of communication internally and externally. Unfortunately most updates are through training, updates to manuals, emails and other “non-persistent” communications. Insurers are generally reliant upon processors, underwriters and claims to be aware of and remember new guidelines and product requirements. Instead, insurers should be looking at systems, across the board, where product rules, guidelines and processes can be built into the system and assure a high quality of adherence and understanding.
- Awareness – usually managed through marketing, means making both the client AND the sales channels aware of what the product is and how to sell it. There is tremendous opportunity for insurers to review agents books of business to pre-qualify existing clients for new updated products. This, plus relevant sales/quote positioning information, fed back to agents as leads helps feed an ever-hungry pipeline, improves agent relations (regardless if they’re tied or independent) plus it drives sales of new products.
- Monitoring and response – finally, insurers need to be able to follow product results (sales and claims) to determine if a product is both successful AND profitable. If ride sharing personal auto takes off, insurers will need analytical touch points to know when to expand to other states, raise or lower rates, adjust underwriting practices and what the line is for deciding whether or not to abandon the market.
Sure, none of this is easy.