Since Aviva announced its new coverage for ride-sharing services, several commentators have suggested that this solves problems for ride-sharing companies such as Uber. But what does it do for Aviva, its customers, and its distributors? The answers are both simple and profound.
Tying customers up in knots?
Jason Storah, Executive Vice President of Broker Distribution for Aviva Canada says that, on the whole, the insurance industry has done a “shocking job getting its hands around the ‘sharing economy’.”
Aviva’s announcement notes that there are 16,000 UberX drivers in the Greater Toronto Area. Storah knows that a percentage of that population will have automobile policies with Aviva already. “So, here is a demand, yet we’re tying our customer up In knots,” says Storah.
Just un-tie them …
The Aviva solution was creation of a ride-sharing coverage endorsement, which, according to the company’s release, extends covereage to “protect ride-sharing drivers (such as those contracted with UberX and the like) from the moment they initiate looking for passengers through to collecting and dropping off those passengers.”
To develop this, Aviva Canada looked at several models, including the US National Association of Insurance Commissioners’ (NAIC) Transportation Network Company (TNC) Insurance Compromise Model Bill, and regulations from Michigan and California. However, at the end of the day, Storah noted, they did most of the development on their own.
The endorsement provides coverage for drivers that spend up to 20 hours per week participating in ride-sharing. Storah notes that on day one, Aviva will use a trust factor in monitoring this. However, they are evaluating alternatives.
The ride-sharing coverage will be available thorough all of the Aviva channels. At present, it is only available in Ontario. However, Aviva is working with other provincial regulators with the intent to expand nationally.
There wasn’t any consultation with Uber in advance. However, Storah says that Aviva has been in touch with them since.
Can we untie anyone else?
Storah sees that the experience with this will cause changes to how products are developed for the new, digital economy. The objective is to meet the needs of the customer using innovative, as well as proven, processes and products. This requires incremental steps, looking for solutions, not roadblocks and maintaining an open mind.
For example, Aviva found the Ontario regulators to be helpful and open. This reinforces other reports which suggest that governments and regulators are taking an open mind to discussions on new business opportunities and models.
Brokers and consumers have provided positive feedback on the product and offers to help refine it. Storah concludes that a more open process and a willingness to look at previously unknown risks from a consumer standpoint is how we need to move forward.
In a blog back in November last, I reviewed several recent examples of proactive government action, concluding: “Like it or not, the ‘sharing economy’ has caught the consumer wave. Pushing too hard against this carries high risk of further consumer disengagement. I’d like think we could find a way to bring insurance to the new risks.”
I think Aviva is showing us an example of how this can be done.
What are your thoughts?
Editor’s note: If you are interested in innovation in transportation and insurance, plan to attend the 2016 Insurance-Canada.ca Technology Conference to hear from a panel of experts (including Aviva) which will focus on Mobility, Technology, Regulation, and Insurance: Squaring the Circle or Creating a New Dimension?