By: Luke Jones, Published on April 29, 2018 10:34 PM, Last Update on April 29, 2018 07:36 PM
The sharing economy is growing, making it easier for customers to access vehicles and rent rooms. However, insurance companies are potentially missing some of the potential risks around short-term accommodations offered by platforms like Airbnb. Speakers at the annual Swiss Re breakfast meeting in Toronto this week, industry experts said it could still be quite easy for companies to insure short-term rentals.
“Think about Airbnb,” Don Forgeron, president and CEO of the Insurance Bureau of Canada, told the attendees. “Today a lot of home and condo insurers may not have considered the increased risk exposure. That’s probably because most people don’t necessarily rush to tell their insurance reps when they are quite literally handing over the keys to their house to strangers they just met online.”
Edouard Schmid, group chief underwriting officer for Swiss Re told reporters at the event that while products are available, there are bigger questions to be answered. “It’s more tailor-made, and really only covers you when you or something is at risk.”
“For any new economic arrangements you have, you need to understand the nature of the contract, the nature of the exposures,” Veronica Scotti, president and CEO of Swiss Re Canada, added, “I think it would be fairly easy to find protection for, say, rental insurance. So you are renting and, instead of just renting for a year or six months, effectively you or renting for a day or two. That’s what happens with this kind of arrangement.”
Artificial intelligence can provide major breakthroughs and offer “huge potential … to take unnecessary cost out” of providing insurance, Schmid continued. “If you add up all these steps – from distribution, policy, the administration, to the claims – I think it is fair to say the insurance product could be offered at a significantly lower cost base if you really get this right.”
“We watch as longstanding businesses fall victim to new ways, powered by new technologies,” Forgeron said. “And yet, those of us who have been around our industry for a while may find ourselves thinking, ‘We’re safe. No one can do what we do.’ But isn’t that what newspaper publishers thought? And travel agents and cab drivers? Isn’t that what Kodak thought?”