For mobility platforms with rented or leased assets, insurance is at the heart of the program. Without it, the business is not sustainable. Insurance costs can be large and unpredictable, and they deserve special attention. Ideally, insurance is a strategic point that helps a platform manage risks, fuel growth and increase revenue – not an afterthought.
Of course, the situation isn’t always ideal. In the real world, mistakes can get in the way of a successful insurance program. Our team has years of experience working with these types of programs and has identified five mistakes in particular that seem to crop up often. By avoiding these, platforms can take charge of their platform’s future.
Mistake #1: Not Being Clear on Your Value Proposition and How to Insure It
Here’s a basic question that every platform should ask early on – what value are you trying to deliver to your customers? This is a fundamental question, and the answer will have a direct impact on your insurance needs.
This sounds like an obvious mistake to avoid, but the key is to make sure you go beyond identifying the type of asset you will offer. You need to take a deep dive into how the assets will be used and what risks need to be covered as a result.
How people use vehicles can be just as important as the vehicles themselves. Food delivery, for example, is very different from ride services, even though both may use the same types of vehicles. One might assume that food delivery is less risky, but it often requires double-parking and leaving the car unintended. Hear more about that from the CEO of Buckle at Insurtech Insights here. These activities can create new risks, and the risk level can vary depending on the phase that the transaction is in, i.e., when a driver is waiting for work, when a driver is on the way, and when a driver is engaged.
Other types of vehicles may be used in different ways and may therefore have different risks. For example, let’s say your platform allows people to borrow RVs. This means you need RV insurance, but that’s just scratching the surface. People will likely use the RV to drive and to camp, so you might need to offer liability insurance, campsite insurance and interior damage coverage, for starters.
You need to be very specific about the exact types of coverage involved. You also need to think about how the situation could get out of scope. What uses could come up that are outside of the intended purpose of the platform, and what new exposures could be introduced?
For example, what happens if a driver is working for your platform and another platform at the same time? How will risks and claims be separated? These are conversations that your team needs to have as you become hyper-focused on your value proposition.
(On a side note: if your users are gig workers and you work with Argyle, DigiSure can help you untangle your data to make your claims much easier to manage.)
Mistake #2: Not Understanding How Workflows and Tech Influence Insurance
Everything is connected. Your customer support tech stack, your customer service workflow, the customer experience, your insurance program, the product offering, and your risks are all intertwined. However, many platforms look at these elements in isolation, causing them to miss the big picture.
To avoid this mistake, you need to look at the customer journey from start to finish. During this process, you can uncover many things that are often overlooked. For example:
- You don’t want to lose new users by asking them too many questions, so you let your UX team decide what to ask at sign up. They are great user advocates, but they probably don’t have experience with risk management. Make sure the right people are brought into the onboarding. They can create a clear understanding of what types of fraud you are trying to screen out so that you can develop a list of data sources to pull. By avoiding a little extra effort on the users side, you might be adding a lot of effort for your internal team as they try to straighten out why your claims costs are higher than expected.
- Platform pricing can be calculated by mileage or time. If you secure insurance by one metric but offer protection plans by another, it's difficult to know if you’ve priced them appropriately. You will also want to make sure you are actually capturing data by your chosen metric.
- If you define your company as customer-focused, but then don’t create streamlined processes for the customer, you're not delivering what you’ve promised. For example, efficient First Notice of Loss (FNOL) procedures can make life easier for your users when they are in a stressful situation, and improving the claims experience for customers is not beyond your control. This is how you keep those customers who chose your platform for your high level of customer service.
Mistake #3: Not Using the Carrier Partner as a Resource
An active carrier partner can help you shape your program.
Platform innovators don’t usually have a background in insurance, or have a large insurance team in house to give it all the attention it deserves. As a result, they might mistakenly believe that insurers just care about collecting premiums. That’s usually not the case. A good carrier actually wants to know about your platform – where you’ve been and where you’re going.
For your platform to succeed, you need to control risk. Insurance carriers understand risk, so they’re a logical partner. Your insurance carrier can see the value in the wider insurance ecosystem choices like underwriting expertise, risk modeling and control suggestions, coverage insights, and claims support.
When your insurance carrier makes a suggestion, it’s smart to listen. The insurer wants the right control in place to support lower loss ratios, and this is often a priority for platforms as well. The carrier is on your side.
To achieve lower insurance costs, you need to provide data showing that your risks are under control. You might not be able to do this the first year. However, if you work with your carrier and implement the best practices they suggest, you should see lower premiums at your next renewal. You should also be able to fine-tune your formula so you can stabilize your total cost of risk and build a more predictable profit model.
On the other hand, if you don’t put controls in place, your risks can become unmanageable. You may even end up in a situation where no one will insure you. Right now, the commercial auto market is hardening, and carriers have less capacity. Most people realize that a single nuclear verdict against your company can be disastrous, but they don’t realize that a high volume of small claims can be equally damaging. Managing frequency is just as important as managing severity. You need to control your risks, and the best way to do that is by working closely with your carrier, or a partner like DigiSure with solid insurance experience.
Mistake #4: Not Using Data to Manage and Refine Your Model
Consumer and economic trends are always going to bring change to your business. You want your platform to change for the better, to improve and to become more profitable. To make sure you’re heading in the right direction, you need access to your own clean data from across your insurance ecosystem.
With access to data, you can gain a better understanding of your entire process, from screening to pricing and claims management. Data enables you to benchmark your progress and make sure you’re staying on track.
Without insights from data, your total cost of risk can get out of control and you won’t be able to identify or remedy the issues. The situation can quickly spiral.
Mistake #5: Not Having Someone Who Understands Insurance on Your Team
Many platforms focus on tech. The tech is important, but the insurance is equally essential.
You need someone on your team who can make decisions with insurance in mind. This person should understand the importance of monitoring open claims, for example. Multiple open claims may indicate a problem, but a team without insurance expertise may not recognize this. An insurance-minded individual can also see risk exposures and how they impact the platform. This can support better decision-making.
The bottom line is that your platform can’t continue to exist if it’s not profitable. Insurance can make or break profit and loss, so your insurance strategy is your roadmap to profitability.
Need A Strong Insurance Partner?
DigiSure provides data and consulting, compliance and screening, insurance and claims handling for sharing platforms. We’re not just a software provider. We help platforms navigate insurance issues so they can take control of their total cost of risk and avoid these mistakes.
