From e-Scooters to heavy-duty excavators: meeting the demand for digital insurance solutions

The rise of new digital business models, such as sharing economy platforms, autonomous driving, robotics, and micromobility, has created a growing need for innovative insurance solutions that can address the unique risks and challenges posed by these ways of doing business. However, obtaining insurance solutions for these digital business models presents specific challenges, including limited historical data on risks, complex liability issues, and regulatory challenges.

According to Meryem Seyyar, Head of Digital Solutions at HDI Global (pictured), the rise of new digital business models also presents a lot of opportunities for insurers, if they are able to be flexible and innovative in order to meet these new needs. In a recent interview, Seyyar emphasised the need for close collaboration between insurers and digital businesses in order to develop solutions that often must be customised and can’t rely on what’s already offered in the market.

Two vastly different digital business models are currently shaping the world we live in, and both need innovative insurance solutions to continue to evolve.

Sharing Economy and Micromobility

The sharing economy has significantly transformed and disrupted various industries as well as created new business models by providing peer-to-peer sharing resources, services, and goods. One of the most prominent sectors in the sharing economy is transportation, which includes car sharing, ride-hailing services, and micromobility. According to a report by McKinsey, the consumer-spending potential of micromobility alone could reach “USD 300 billion to USD 500 billion globally by 2030.” Home-sharing, another popular sector in the sharing economy, is expected to reach a market size of USD 170 billion by 2025, according to a report by Allied Market Research. The growth of the sharing economy and micromobility is likely to increase the demand for insurance products tailored to the unique risks associated with peer-to-peer sharing of assets and the use of micromobility services. This growth can also be expected to bring about changes to the traditional insurance industry, requiring companies to adapt their underwriting practices and risk assessments to this evolving landscape.

As the sharing economy and micromobility continue to grow, their potential impact on sustainability and climate change is becoming increasingly important to consider. With the world facing serious challenges due to climate change, companies and consumers are becoming more environmentally conscious, which could lead to an even stronger focus on many sharing economy solutions. Ultimately, it also has the potential to support the Environmental, Social, and Governance (ESG) framework by promoting sustainability and responsible corporate behaviour.

Impact on Environmental, Social, and Governance

On the one hand, the use of asset sharing economy models such as car sharing and bike sharing can help reduce the number of personal cars on the road, thereby leading to fewer emissions and less traffic congestion. According to McKinsey, “micromobility could theoretically encompass all passenger trips of less than 8 kilometres (5 miles), which account for as much as 50 to 60 per cent of today’s total passenger miles traveled in China, the European Union, and the United States.” The use of electric or hybrid vehicles for ride-sharing, or the promotion of carpooling and bike-sharing as alternative modes of transportation, could therefore contribute to reducing carbon emissions.

In addition, micromobility solutions can also provide affordable and accessible transportation options to underserved communities, improving transportation equity. According to a report by the World Economic Forum, innovative mobility solutions can be a part of socio-economic advances and social inclusion. Overall, the sharing economy has the potential to contribute to sustainable development by promoting responsible consumption and production, reducing carbon emissions, and increasing access to goods and services for underserved communities.

Growth in niche sharing markets

The sharing economy is also no longer limited to just a few industries, and new niche markets are emerging, such as peer-to-peer rental of recreational equipment (i. e. boats) and even professional kitchen sharing. These niche markets offer consumers more options for sharing and offer businesses new opportunities for growth. However, they will require insurance solutions to manage the risks involved and provide consumers with not only strong trust in these services, but also a reasonable level of safety. Safety is also one of the key elements in the application of a very different, but equally exciting and potentially disruptive technology: remote control and robotics in heavy duty applications.

Remote control and robotics in heavy-duty applications

Remote control and robotics software applications in construction, mining, logging, and logistics is an exciting field that combines cutting-edge technology with traditional heavy-duty trades. Some systems, such as AutoDrive by RRAI, are able to provide advanced driver assistance and automation capabilities by operating without GPS or special road markings, and can therefore fully adapt to almost any on- or off-road infrastructure. Initially developed for defense applications, the technology can be applied in “rugged-terrain applications such as mining sites, logging and forestry roads, construction and other complex operating design domains.”

Worker safety is a key priority

These technologies have the potential to revolutionise heavy-duty industries by allowing for the remote control of vehicles and machines, automating manual or dangerous tasks, and thereby not only increasing efficiency and precision, but also significantly improving safety. The construction industry, for example, has one of the highest rates of fatal accidents of any industry, with a fatal injury rate of almost 10 per 100,000 workers, according to the U.S. Occupational Safety and Health Administration (OSHA). By enabling human workers to perform dangerous tasks without being physically present in hazardous or difficult-to-reach areas, the risk of injury to the operator is greatly reduced. ASI Robots is a technology company that specialises in the development of advanced robotics and autonomous systems which can be integrated into a variety of heavy-duty vehicles and construction machinery, including excavators, dozers and haul trucks. Human operators can control such machinery remotely, allowing them to perform tasks on the jobsite even if they are physically located elsewhere.

From an insurance perspective, the remote or semi-autonomous operation of construction vehicles can also pose significant challenges when it comes to the potential risks of accidents and property damage, which could lead to legal liability for the owners or operators of these vehicles. Complex software and hardware systems can experience breakdowns or malfunctions, leading to costly repairs and downtime.

Digital business will need digital insurance solutions

These are just a few examples, and the insurance needs may vary depending on the specific digital business model and its operations. However, as the digital economy continues to evolve, we can expect to see an increased demand for even more innovative insurance solutions that are designed to meet the unique needs of these rapidly growing sectors.

According to Dennis Siebrasse, Global Head of Casualty Claims at HDI Global, “the speed in which business models, and hence the needs of companies and its existing or future clients in the digital world develop, is breathtaking. So, insurance solutions must be as nimble as what they protect, this includes claims services and handling. It is about flexible, fast and versatile services.” Indeed, new solutions will be critical in enabling digital businesses to thrive while managing their risks effectively, and in helping insurers to stay ahead of the curve in a rapidly changing market.

Authored by HDI Global SE

If you are an insurance broker and would like more information on HDI’s Digital Solutions capability, please CLICK HERE, leave a message and youTalk-insurance will pass your enquiry on to Meryem Seyyar, Head Digital Solutions, HDI Global SE