Consulting Czars

The advent of the sharing economy has encouraged new business models surrounding automobile
ownership and access. Transport Network Companies such as Uber and Ola have launched ride-
hailing taxi services that have become the preferred choice for customers in congested urban centres
of the world. This has resulted in a reduction in the pace of growth of auto insurance among private
car owners. Further, carpooling services such as Blahblahcar and car sharing services such as Zipcar
are transforming the way cars are utilized through collaborative consumption. This new competitive
context poses the following challenges for all auto insurance companies:

 Companies that have tie ups with Ola/Uber own a fleet of cars (“inventory”) that are used for
ride-hailing purposes iven their popularity in congested urban centres nsurance
companies have to now target such large buyers with different value propositions vis- -vis
individual buyers
 Carpooling services such as Blahblahcar enable individual owners of the automobile to use
the spare capacity of their automobile (“asset sharing”) to transport passengers who are
travelling to the same destination as that of the owner of the automobile. This presents new
challenges for assessing accident liability of the co-passengers as traditional insurance
policies only cover the liability of the owner-drivers of private vehicles.
 Car sharing services like Zipcar permit subscribers to own the car on a time-sharing basis to
run private errands, undertake short-distance travel etc. Neither the subscriber-drivers nor
Zipcar are the legal owners of the vehicle. These vehicles are leased to Zipcar by auto
manufacturers such as Volkswagen and are driven around by Zipcar’s members Car sharing
business models blur the line for auto insurance companies on issues related to accident
liability (who is entitled to accident benefit), third party liability (who should pay for
damages/injuries suffered by third parties), liability incurred during travel (was the insured
driving the car when the accident/damage occurred) and liability incurred while the vehicle
is parked (did the car suffer damage when it was parked in the parking space?).

The emergence of innovative business models surrounding automobile ownership and access have
invalidated the core competence (“underwriting”) of the insurance companies Firms have to now
capture new information and estimate risk associated with these various services to accurately
determine competitive premium rates.
Prepare a strategic roadmap for an auto insurance company to compete in this new
reality and remain profitable in the insurance side of the business.

Note: You may make use of credible information available online by quoting the references.

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