Author: Brandon Schuh, Senior Vice President at U.S. Insurance Broker Christensen Group
When we think of companies innovating, we don’t usually think of insurance companies. With constant headlines of artificial intelligence, cloud computing, electric vehicles, autonomous vehicles, and the like, most of the innovation that goes on is happening in technology. Because of this constant refresh in tech and product, insurance is forced to keep up.
There isn’t a whole lot of glitz and glamour, but the insurance sector is innovating at a faster pace than ever. Few places better depict that innovation than the micromobility/new mobility space. Mobility is at the heart of the shared economy and happens to be one of the more risk-centric exposures.
Over the last several months, I’ve noticed a few trends that stick out and are becoming a more integral part of the day-to-day brokering in micromobility.
The insurers reentrance
We are beginning to finally see more interest from new markets. Because of early legal issues in 2018 with the kick-off of the shared scooter space, micromobility became a scary word for underwriters. There was a lot of negative attention and anecdotes that became almost gospel when submissions came in. From streets littered with scooters and bikes to accidents, hyperbole was being pushed out like fishing tales across the spectrum and it really restricted markets that were interested in getting involved. Years later, with very few casualty claims penetrating carrier layers, those tales of fiction have dissipated to lore. We are seeing renewed interest and more capacity to enter micromobility. It’s been a slow reentrance but a reentrance none-the-less. The space remains a challenging one to insure and must still be carefully considered when it comes to premium. But ultimately, this will be a good thing for everyone.
Quotas & Slides – where operators can take risk
A large part of premiums are derived from the risk-taking that the operator decides to take. Most carriers in this space have, from day one, taken the approach that there needs to be a significant amount of “skin in the game” by the operator/insured. This trend continues (and by the way it continues in many industries and not just micromobility). Beyond the basics like Self-Insured Retentions, a trend we’ve been seeing of late (and one we enjoy looking at) is studying other areas where the operator can take risk. This could range from the client taking a “Quota” of the risk themselves, to ventilating their excess layers, or even using a performance based “slide” of some kind where, depending on the claims activity, the operator can earn premium back. Of course, there are always ideas around captives and creating an operator owned insurance entity. Captives are not usually a solution for a high-claims frequency environment, but they have their place.
Riders to carry insurance
With California heavily regulating the micromobility space and pushing out its AB371 bill for shared mobility providers and users, this has forced a lot of carriers to start thinking more about ways to extend some insurance limits to the riders themselves. The bill requires that every rider has $10,000 in protection from third party liability. As of right now, in California, the operators are providing this coverage for their customers. However, many of us are looking at ways to broaden this coverage and make it more applicable to the greater populis. Eventually, it is most people’s opinion that I speak with, that riders of electric micromobility schemes will need to produce their own insurance. Much like you must buy your own car insurance. A proper analogy would be renting a car at Hertz and being given a choice. Do you want to use your own insurance or do you want to buy from us? That is where many see this trend going. Operators providing the insurance for a cost. Doing this on a per-ride basis is challenging (and likely costly) so I would imagine that we’ll see more subscription-style concepts arriving to market that can more easily lend themselves to this type of concept.
Auto Liability losses on the rise
Auto Liability Losses are becoming an unfortunate trend in the space. One that can likely be solved by more innovation from micromobility but, now, is problematic. One of the most resource-intensive areas of micromobility tends to be the rebalancing of the fleets. Fleets of scooters and bikes get scattered amongst a city and it’s up to the operator to “rebalance” those fleets and place them back in high traffic areas that will garner further rides. Most operators today are doing this with box trucks and sprinter vans. These vehicles are big, bulky, and hard to drive. They are particularly challenging to drive in dense metro cities, where most micromobility is found. Imagine driving a box truck in San Francisco; loading and unloading scooters. This was an unexpected area for claims, but they’ve been extremely prevalent across the board. This has led to a dearth of capacity and an exodus of markets; leaving brokers scrambling to find new ways to provide solutions to their clients.
New modes for fleet re-balancing
The next trend links back directly to the auto loss trend. Because we’re seeing these auto losses, operators are looking for new ways to transport these products. There are a few different mediums that we’ve seen show popularity.
- Low Speed Electric Vehicles are high on that list. Companies like Gem (Waev) are becoming an optimal alternative to box trucks and sprinter vans. They are small, easy to manoeuvre and are quite speed restricted.
- Electric Trikes are also a popular solution for this issue. There are a variety of companies out there building Trikes; my friends at Coaster Cycles come to mind as one that has been exploring this space for a while.
- There are also some operators that are creating their own solutions to these problems and (once again) innovating to solve problems. Once such a company has designed its own trailer that will be pulled by one of its e-bikes to transport and rebalance.
Continued: All of these ideas and mediums need their own insurance. So, it goes back to my original point. Coverages for these new mediums have not really existed in any sort of macro use-case to date. But as micromobility innovates, so does insurance. We’re looking to build programmes and policies to cover these different styles of vehicle fleets. Hopefully, by doing so, we’ll right-size the issues and help ensure profitability for a space that we all love.