Ridesharing Insurance Must Embrace Telematics to Stay Ahead

How Can Insurance Telematics Technology Maximize the Value of a Ridesharing Insurance Program?

With the increasing popularity of ridesharing apps, like Uber, across North America and the world, insurance companies have had to consider the implication to their existing policies and policyholders. It is estimated that 55% of the US population has access to Uber and that there are over 160,000 people currently driving for Uber, and that is increasing by 50,000 a month.

With these staggering numbers, one of the main concerns of these programs is a liability. If someone is paying to be driven somewhere, then the vehicle they are driving is considered a commercial vehicle and their insurance policy wordings should reflect that. This might be an opportunity to consider a Usage-based Insurance program that could monitor if a vehicle is being used for private or commercial use.

A telematics based system may be the best tool for insurers to monitor a vehicle’s use by linking directly to the ridesharing app. It would allow insight into if the app is in use or not, letting the insurers to know if and when the vehicle is being used commercially. If the app is being used and the insured is participating ridesharing, it would be able to determine the amount of time spent driving as well as the distance and location. This information would allow the ability to compare the data from the vehicle when it is being used for personal purposes, versus when it is ridesharing. This is valuable for insurers to understand the nature of the risks, allowing a better understanding of how policies need to be written, what the exposures and risks are and how the policy can cover those participating in ridesharing.

Ridesharing, currently available in 400 cities worldwide, is making the case for UBI more relevant than ever. In part from accelerometers and other data points, it is now known how fast a driver travels, the distance and locations traveled and how many trips they have taken. With this amount of data, user experience can be improved, safe driving is promoted and insurers’ ability to serve drivers is facilitated.

Insurers could also use the new wave of ridesharing as a testing ground for new insurance policies that share a balance between personal and commercial policies. Drivers that also provide ridesharing services would not have to deal with multiple insurance policies or even companies, to get their full coverage. Right now insurance is dependent on specific insurers partnering with specific ride-sharing companies.

As this type of driver segment continues to grow, insurers will need to prepare to be able to provide the proper coverage. Insurance companies could support these drivers with a UBI solution to cover off all the bases.