Ridesharing Insurance Still Needs Work

Many large personal U.S. auto insurers made time in 2015 to refresh their policies and address the issue of ridesharing by offering ridesharing endorsements. Rolling those endorsements out nationwide and getting more insurers to offer them is still a work in progress, and insurers need to consider three pitfalls.

• Lack of data: Most endorsements have no telematics strings attached. Insurers are adding the endorsement at a relatively low cost without asking drivers to provide any reliable usage data. We believe many insurers made the right move in offering low-cost endorsements, yet they are missing out on the opportunity to trade a low-cost endorsement for the benefit of gathering better data on ridesharing activity. Insurers that haven’t yet deployed an endorsement should leverage dongles or smartphone technology to power the endorsement.
• Limited data: The rare solutions, such as Metromile, that make use of telematics data to provide coverage are too limited. Metromile’s solution is well designed for drivers who stick with Uber, but it falls short for drivers who use Uber and other Apps like Lyft, Fasten, HopSkipDrive, and Shuddle. In Aite Group’s recent survey of ridesharing drivers, we find that only 39% of drivers stick with one service like Uber. The vast majority of drivers is opportunistic, working for different services.
• Restrictive coverage: While ridesharing endorsements are meant to do the right thing for insurers’ customers, they are restrictive, failing to account for the growing range of sharing economy activities that drivers may use their cars for. For instance, 30% of drivers in our survey expect to do deliveries over the coming year, not merely transport people. Insurers have been oblivious to the rise of on-demand delivery and need to refresh their ridesharing endorsement to include that activity as well.

Several insurers surprisingly moved fast on the ridesharing issue in 2015, but they need to keep up with the new ways that policyholders are leveraging their cars to generate income.