Lloyd's Reports on Sharing Economy Opportunities and Risks

Lloyd's recently released a report titled Sharing Risks, Sharing Rewards: Who Should Bear the Risk in the Sharing Economy? According to Lloyd's, sharing of assets and services creates new opportunities but also new risks.

It can be difficult for traditional insurance coverages to be applied to disruptive sharing economy models as assets are fragmented—owned and shared among users—and new multiparty relationships among platforms, providers, and consumers draw further questions around who is ultimately responsible for managing and mitigating risk.

Insurers have long provided insurance solutions for "tangible" physical assets, but in the sharing economy, assets are often intangible, including intellectual property, trust, and reputation. The fragmented aspect of assets requires a different approach to risk management based on the behavioral economics of consumer preferences and attitudes toward risk.

Both sharing economy consumers and providers cite a number of concerns around risk—including personal safety, quality of service, damage to assets, theft, and lack of sufficient safeguards in the event something goes wrong—which may prevent shared platforms from unlocking untapped supply and demand for their services.

"The sharing economy itself created a new risk landscape with many untested assumptions around who should be managing risks and liabilities, because of this insurance can play a significant role," said Trevor Maynard, head of innovation at Lloyd's.

Key findings from the report include the following.

Despite exponential growth, untapped supply and demand remain on the sidelines of the sharing economy.

• Nearly half of US consumer respondents (49 percent) reported having never used a sharing economy product or service.
• On the provider side, just 8 percent of US consumer respondents have provided an asset or service through a sharing economy site.

Sharing economy consumers are skeptical.

• Consumers globally cite personal safety (52 percent) as their greatest concern, but they're also worried about the quality of service (42 percent), damage to assets (42 percent), theft (40 percent), and lack of sufficient safeguards in the event something goes wrong (38 percent).
• Consumers and providers recognize the benefits of shared goods and services, including affordability and convenience, but for the majority of UK and US consumers (58 percent), the risks outweigh the benefits.

Risk reduction could unlock sharing economy growth opportunities.

• The majority of consumers globally would be more comfortable using sharing economy services if insurance was offered (71 percent) and more likely to consider sharing or offering a service if insurance was offered (70 percent).
• Most current providers (78 percent) believe they would get more customers if insurance was offered.