While growing up, we shared food, toys and study notes with our friends and siblings. Today as grown-ups, we can share much more, even cars and homes! And not just with kith and kin.
Welcome to the age of the sharing economy, which puts purpose before property, experiences before possessions. The phenomenon is changing the social and economic landscape around us as the younger generations shun over-consumption, choosing instead to borrow just what they need, when they need.
But how do you insure something that does not strictly belong to one person? The Allianz International Ecosystem on Sharing Economy is working on identifying the opportunities and challenges that the rise of the sharing economy provides.
Led by Allianz France, the ecosystem comprises teams from Great Britain, Germany, Spain, Italy, Switzerland, Benelux, and the Asia-Pacific region, among others, across entities such as Allianz Partners, Allianz Automotive, Allianz Global Corporate & Specialty (AGCS) and Allianz Technology.
Delphine Asseraf, who leads the ecosystem, elaborates on the concept:
Essentially, the ability of individuals to rent services or goods from owners who do not use their items full-time or from those who have time to offer certain services. Digital platforms have been a major driver of the sharing economy.
At the heart of the concept is a growing awareness of the impact of over-consumption – ecological, social and financial. It takes into account the scarcity of resources, the purchasing power of households, and the importance of minimizing waste.
Examples of the sharing economy abound.
Need a place to stay on that vacation to Paris? Log on to Airbnb. Trains and flights to Frankfurt all booked out? Carpool with Blablacar.
The answer lies in a question often asked by minimalists - why buy when you can rent?
For a few euros, Cityscoot will provide you an electric scooter in Paris, Nice or Milan. No need to purchase a drill just to hang a few paintings in your new home. The ManoMano platform will put you in touch with other passionate DIY enthusiasts.
There’s little that sharing economy doesn’t cover these days. Even designer clothing. An invitation to an A-list party need not burn a big hole in your pocket. Put away that credit card and rent a top-end outfit for a few bucks instead.
Ditto for electronics, vehicles, jewelry, homes, leisure, equipment and a myriad of other products and services.
Technology played a huge role in the development of the sharing economy. Especially "peer-to-peer" systems - digital platforms that connect people.
The global economic crisis was a trigger as well. Faced with economic headwinds, people looked to save money wherever they could. Paying only for use is cheaper than buying and maintaining things.
Then, there’s growing awareness about the need for sustainable practices, which promote use over ownership.
However, frugality remains the main motivation for users of the sharing economy: in a 2016 survey by YouGov for Sailsquare, 61 percent respondents said cost was the main driver of their decision to use sharing economy products and services. Flexibility and convenience of such platforms, a desire to experience new ways of travel, and a friendlier human experience were the other reasons cited by respondents.
In Europe alone, sharing economy represented 28 billion euros of transactions in 2016, according to a survey by PwC
. This could exceed 570 billion euros by 2025.
Without the protection of insurance, few people would be willing to let strangers use what belongs to them.
Consider this scenario: the owner of a car rents it out to a user. If there is an accident when the user is driving the car, who pays for the damage - the owner or the driver? Traditional insurance may not be the answer here.
An example of a suitable solution comes from Allianz’s special auto insurance contract for Drivy, a car-sharing platform. When the car is rented out, it is not the owner's insurance that covers the driver but Drivy's insurance. This way, both the owner and the driver can avoid problems if there is an accident.
Such specific insurances cater to the specialized needs of the sharing economy, protecting both the provider and the user of a product or service.
As the trend catches on, don’t be surprised if it extends even to very expensive items. Accordingly, the role of insurance will become even more important.
Because without protection and trust, who will dare to share?