Schuh first started working in the world of new mobility insurance in 2015.
Today, as head of Christensen Group’s shared practice, he helps cover 500,000 devices around the world.
One of the top 50 brokerages in the United States of America, the firm is one of the largest to operate without outside ownership in the whole country.
Zag: Christensen Group has a shared economy practice and different segments within that. Can you explain those segments?
BS: “The sharing economy division really covers all aspects of transportation, including rideshare and car leasing platforms which fall into one segment. We then have a segment focused on the micromobility operators, which includes shared bike, e-bike and e-scooter schemes and a segment that works with subscription or direct to consumer businesses. This differs from an insurance perspective to quite an extent compared to the shared schemes because the risk is more based on the quality of the product than how the operation is run from a risk management perspective. Finally, last mile delivery falls in between these two segments as it takes on risks from a vehicle quality and an operational perspective. There has been a lot of investment in last mile delivery over the past few years and as a result insurance firms have had to adapt.”
Zag: What vehicle models do you deal with when working for last mile delivery operators?
BS: “It is constantly evolving. It includes anything from electric trikes to bikes with backpacks to scooters with a built-in storage chamber on the front. Larger low-speed EVs are also getting involved because they are road legal but also agile and nimble which helps with last mile deliveries. The variety of vehicles involved in this space means that there is a real spectrum of requirements from an insurance perspective. Electric bikes only need a general liability policy, but an EV will need an auto policy which can bring about regulatory hurdles.”
Zag: A lot of claims were made in the early days of the shared micromobility schemes. What pattern have you noticed within the last mile delivery segment?
BS: “There is a big difference between someone riding an e-scooter for their own enjoyment, compared to someone transporting food as their job. As a result, I think they ride carefully and take it more seriously. Additionally, the quality of the rider has been checked if they are employed by a last mile delivery firm, whereas many of the early micromobility accidents involved people that had never used the technology before. That experience is an important factor and combined with the seriousness with which they treat their jobs, there are far fewer claims being made. Employers may be settling cases with riders under the radar, but that never happened in the early days of the shared schemes being available. If the riders are taken care of, they are less likely to make a claim.”
Zag: Do you have any data to support this?
BS: “From what I have seen, one in 1,000 trips might result in a claim, so it is a tiny percentage. Because of this employee and employer relationship, a lot of incidents are being resolved without a claim being made and this is a big difference compared to the rest of our shared economy practice. In 2017 and 2018 when micromobility was still new, claims would occur fairly frequently but as the market has matured claims are made far less often. And even in the shared space, few liability accidents would penetrate the insurance layer because the operators had insurance schemes in place. Within last mile delivery, the deductibles are smaller due to the safety risk profile, but still few claims occur.”
Zag: If so few claims are being made, has last mile delivery become a growth area for the brokerage?
BS: “Yes, last mile delivery has become a real area of growth for us, and it also appears to offer better margins for the operators. Shared micromobility involves a lot of resource intensive activities because of battery swapping and fleet rebalancing, whereas with last mile delivery the rider will return the vehicle at the end of each shift. Looking ahead, last mile delivery, whether that means working with equipment manufacturers or operators, is a real area of focus for the firm. We have received a lot of enquiries and a lot of firms are keen to move into this space.”
Zag: The sector is certainly growing rapidly in the UK, but how is it evolving in the US?
BS: “We are not seeing a lot of new platforms emerge, but there are plenty of new vehicles. Fleet managers have been emerging as an intermediary between the manufacturers and the major platforms such as DoorDash, Grubhub, FedEx, Amazon or UPS. I think the issue that remains is the size of the vehicles available and how the platforms make the transition to utilise micro vehicles in the future. The fleet managers can help this transition by working with the manufacturers to offer a package that includes vehicles, insurance and telematics to a platform and then operate the deliveries on their behalf.”
Zag: Zooming out, Christensen Group operates an employee-owned stock plan (ESOP) model. How does this benefit how the firm operates?
BS: “The ESOP model means the business is 100% owned by employees. Insurance is very much a people business, especially in specialty or unconventional markets. In my position as a broker, your job is to be a storyteller and when it comes to hiring these people with the storytelling and communication skills that are needed for this job, telling them that they will immediately become a part owner is a great selling point. And it means we hire the best people. We are one of the only brokers in the country that can offer employee ownership in the firm, as normally you would have to buy into it at a significant cost. Secondly, as an ESOP we don’t have to pay taxes under federal law and because of this our stock prices can accumulate more quickly and compound, which is another great recruitment tool.”
Zag: Why do brokers need to be good storytellers?
BS: “Brokers need to have a talent for storytelling because we work in a people business. Numbers are important too of focus and actuaries play a crucial role, but relationships are the most important factor. Therefore, being a good storyteller, communicator and relationship builder are probably the three most important qualities for getting deals done. Building trust is an important part of insurance and if that ceases to be the case, I won’t be interested in the industry anymore. As brokers we sell to the client and to the underwriter, so we need to rely on our relationships so that we can retain good standing on both sides.”