You never know when those Airbnb guests — didn’t they look so innocent on Facebook? — will leave behind a broken TV, whiskey bottles and an unmade bed — or when that rideshare driver will need extra protection against all those risks on the road.
The sharing economy might carry with it a feel of hipster, post-modern edginess, but some things never change: Businesses and business operators need insurance. The challenges and opportunities of providing that protection was the main theme of a recent discussion that Karen Webster had with Tim Attia, CEO of Slice Labs, which sells on-demand policies tied to homeshare and rideshare.
“We are operating in the gap,” Attia told Webster. “We are covering things other people won’t cover.”
Some of those things — when it comes to the drivers upon whom companies like Uber and Lyft depend — include vehicle damage, personal injuries and other such expenses. For the homeshares offered by the likes of Airbnb, they might not only include damaged electronics and broken furniture, but utility problems, bedbugs and even municipal fines, he said. An Airbnb host would buy coverage for a specific period.
“You can get coverage for the weekend and shut it off during the week because you don’t have guests,” Attia said. “The only questions we ask is name and address — there is no application for insurance.”
Instead, an insurance operator providing protection for the participants in the sharing and gig economies relies on data points collected by its employees, at least according to the model used by Slice.
“We look at the property, the price of the property,” he said. “We know if it’s a vacation property, or a blacklisted property. We gather all the information.”
Slice charges $8 a night for its Airbnb coverage — with coverage embedded in the overall transaction — and Attia said the average stay covered is for three nights. Do the math and you can see the profit potential.
“It’s not a cheap product,” he said. “We get more rate than an annual policy.”
He said the company can pay claims of up to $750,000 out of its own bank account.
Ridesharing, too, presents a juicy opportunity. In New York City, for instance, those drivers are required to carry insurance that costs $600 per month, according to Attia. The more policies written, the more data a company such as Slice has, which can then improve its products and profit potential, he said.
“We have to get the data ourselves, and we have to be responsible for the data,” he said. Attia added that he also uses data from “actuarial firms on all our products.”
Sure, but why can’t the longstanding insurance companies craft similar products — policies informed by those companies’ expertise with actuarial data and other relevant sources of information? According to Attia, those insurance carriers can add 37 cents on the dollar to the expense of polices, with digital offering a chance to reduce that cost.
That might be true, but hanging over the entire discussion was a prospect familiar to most retailers and payment providers: Will Amazon get into this business? After all, the eCommerce operator led a $12 million funding round in late May for Acko, a digital insurance startup in India. Acko offers car, bike and mobile insurance.
Amazon might not know much about insurance, relatively speaking, but the company has the money to hire the experts who do — along with the marketing and payments experience to give it a solid run.
“I think if Amazon wants it, they can build it,” Attia said. “But I am not sure Amazon, at the end of the day, wants to take the risk.”