Page 24 - Insurance Times April 2019

Merely a platform lack of data. As an underwriter, I rely on historical data to
accurately and fairly price a particular risk. And there isn't
Nonetheless, even as these new business models upend
traditional relationships between suppliers and consumers, a lot of data currently on the risk profile of different peer-
the risks remain; accidents and property damage happen, to-peer exchanges.
errors occur, valuable materials are stolen or
misappropriated, and so on. These challenges are particularly acute with applications for
sharing possessions, like the new German company Fainin;
it provides a platform which is intended to help people to
And as traditional ways of doing business become more
fluid, new risks and uncertainties are emerging. In particular, lend and borrow a wide variety of products including
cameras, outdoor and sports equipment, electronic devices,
many sharing economy companies currently assert that
tools, and so on.
whatever happens in the course of a peer-to-peer
transaction is between the participants and all they are
doing is supplying the platform. Possession-sharing platforms are based on the fact that
there are many, many items someone will use only
occasionally. Or as someone once noted: A lot of people
The terms-of-use agreement for one peer-to-peer exchange,
for example, notes explicitly that it is, "merely a platform own power drills; in most cases, they will be used for just
…." It then goes on to renounce liability for any "claims, 15 minutes in their entire lifetimes.
demands and damages." Buyer and seller beware.
While trust is essential in a community of people sharing
possessions - and reinforced by the rating system - members
While rating systems are intended to create an incentive for
still want reassurances that they will be protected.
people on both sides of a transaction to be honest,
considerate and careful - that is, minimize the risks - they
don't serve to entirely mitigate the assortment of risks users That's where we come in. AXA XL has created tailored
and providers face. We all know that, unfortunately, things solutions that enable sharing economy companies like
sometimes go wrong. Fainin to arrange group insurance covering both lenders and
borrowers as an explicit part of the customer value
proposition.
As a result, this stance - "merely a platform" - could be
impeding further growth in some sectors of the sharing
economy. There is growing evidence indicating that many The policy we tailored for Fainin covers bodily injury and
property damages, up to a fixed limit. The coverage applies
potential users and providers are reluctant to engage in peer-
automatically for transactions conducted via Fainin's
to-peer exchanges given the possible uncertainties and risks.
platform.
In other words, protecting participants on both sides of a
Our shared aim with this solution is to enhance the
peer-to-peer exchange could represent an additional key
success factor for sharing economy companies going customer experience by mitigating the risks individuals face
forward. when sharing and lending their possessions. It is a "sleep
easy" coverage that is integrated seamlessly; users of the
platform don't have to take any additional actions to be
Insuring the sharing economy protected up to the amount, and on the terms we provide
One of the challenges - or, depending on your perspective, for all users.
opportunities - in protecting the sharing economy is that
traditional insurance models don't readily fit these new Our experiences with Fainin reinforce our view that peer-
business models. to-peer exchanges must be prepared to provide unequivocal
answers to the concerns many people have about
Personal lines policies, for instance, don't cover assets used borrowing or lending something via such a platform: when/
for commercial purposes, and a separate commercial lines where am I protected; what am I protected against; and
cover is a costly and onerous requirement for someone how much protection do I have? Our collaboration with
who, for example, simply wants to offer some of his/her Fainin has enabled us to develop solutions that answer
goods through an online platform. these questions and allow lenders and borrowers to join this
community knowing they will be covered in the event
Another challenge in covering peer-to-peer exchanges is a something goes wrong. T

24 The Insurance Times, April 2019