TECHNOLOGY
TECH AND THE CHANGING FACE OF INSURANCE
It’s only 2016, but the real world is quickly moving into the realm of science fiction. Drones, driverless cars and not-really-hoverboards are (or soon will be) commonplace.
We’ve also seen technology change industries not normally associated with the term “cutting edge” — Uber has all but replaced taxis for many people, and Airbnb made finding lodging as easy as opening an app. But with these new toys and technologies come questions. Whether it’s about which regulations apply to disruptive players, what new tech means for existing jobs or why hoverboards keep exploding, there’s a learning curve with integrating new technology into our lives. Here’s the one question everyone should be asking: What does this mean for my insurance?
Beginning in 2016, we’ll start seeing established companies and newcomers alike move to fill insurance coverage gaps being created by new technology and industries. There’s a reason so many people think insurance — what it covers, how it’s sold and more — needs an overhaul. The industry is slow to react, and when finances, security and safety are on the line, you don’t want to be playing catch-up. Do I need insurance for my drone? What does a driverless car mean for auto liability? When the lines of coverage are blurred, it leaves a grey area of confusion at best and a complete gap in protection at worst. The good news is that change is coming
10 | MARCH 2016
(and in some cases is already here). And the opportunity is too big to be ignored for long. Beginning in 2016, we’ll start seeing established companies and newcomers alike move to fill insurance coverage gaps being created by new technology and industries.
Current Evolution We’ve already seen changes come, slowly, to the sharing economy — the phrase for the industry that allows everyday folks to use what they already own (like their cars or homes) to provide goods and services to other people. Take Airbnb, for instance. Many people don’t have liability coverage through their homeowner’s or renter’s insurance. If your insurer found out you were using your house as a makeshift bed and breakfast, your policy was likely to be canceled. Now, though, there are more options for protection. Umbrella policies help cover a wider range of issues. Smaller insurers such as Peers are providing adequate insurance coverage. And even if Airbnb’s Host Protection Coverage and Host Guarantee only provide secondary coverage and don’t completely fill the gap in protection, they show that these companies recognize the need for such products. Leaving your customers out to dry isn’t the best way to build a business. Or look at Uber. There used to be a gap in insurance coverage where an Uber driver would be covered by their own auto insurance when they were off the clock, covered by Uber’s insurance when driving a passenger but covered by neither when they were looking for a customer. Just like with Airbnb, Uber drivers could get their coverage canceled if
they tried to file a claim when they were using their car for commercial purposes. Your best solution was hoping you picked up a whole lot of passengers to cover the cost. But in the last few months, we’ve seen rideshare coverage expanding. First it was small companies like Metromile, but major insurers like MetLife are stepping up to provide some form of rideshare insurance.
Room for Growth The sharing economy has begun to evolve, but there are new professional sectors around the corner that soon will go through the same growing pains. Drones are going to take off in 2016. Even if we don’t get the long-hypothesized utopian drone delivery services we’ve been promised, they’re already in use in some industries; insurance companies, for example, are using them to survey damaged properties. Some specialized companies provide commercial drone insurance, and earlier this year AIG was the first major player to offer their own insurance. But personal drone use is still underinsured, even with the FAA predicting one million drones sold during the 2015 holiday season. As with ridesharing, there are use cases for which insurers simply aren’t offering coverage. Does your homeowner insurance cover drones? The answer is a case-by-case “it depends,” which is hardly helpful. The companies that provide comprehensive coverage for all facets of drone ownership, ranging from personal injury liability to hull and body protection, will find a lot of paying customers. WISCONSIN INDEPENDENT AGENT