Highlights from the “Risk and Uncertainty for Users and Operators,” panel at The National Shared Mobility Summit
During the National Shared Mobility Summit earlier this month, Rachel Allen, who is Arity’s expert in all things shared mobility participated in one of the standout panel discussions of the week. Titled “Risk and Uncertainty for Users and Operators,” the panel also included RubyRide’s Jeff Ericson, Maureen Brown from Munich Reinsurance America, and was chaired by Laura Fraade-Blanar from the RAND Corporation. While there were a number of insights and outstanding observations from the experienced group, here are Arity’s top three takeaways from the discussion.
Pivoting to Optimize Insurance Costs
Jeff Ericson, the founder, and CEO of RubyRide, which provides a subscription-based driver service, told the story of how insurance affected his service model. Originally, he started the company with one vehicle and continued to purchase additional vehicles to RubyRide’s fleet as rider demand grew. Vehicle ownership worked well in a lot of ways in Ericson’s view, but the company’s insurance provider did not have the products or capabilities to meet the unique needs of an emergent shared mobility company at that time. This was challenging for Ericson personally as he had to work through multiple layers of the insurance industry, which was a long process that was slowing the company’s growth rate. Ericson eventually had to reevaluate how insurance costs impacted his business and this was one of the major reasons that he transitioned RubyRide to a driver-owned vehicle model.
Evaluating ROL, Return on Learning
Throughout the panel, Maureen Brown, the underwriting and operations manager for the Incubator, for Munich Reinsurance America, offered a number detailed insights on what she looks when evaluating potential customers in the shared mobility space. Brown explained that a majority of insurance companies are not working with these startups because there is a very small amount of data available compared to what’s typically required to design coverage. However, she looks at the shared mobility space as a massive opportunity and she approaches each opportunity looking for the return on learning.
Brown offered three key elements that she considers when working with a shared mobility company:
- The Team – Brown looks for an experienced executive team with a record of success, ideally in a space related to shared mobility. She looks for operational signs that the company has been funded for reasons beyond the mere promise of an idea.
- The Data – While data is important, Brown understands that it will be minimal when working with emerging shared mobility businesses. From a risk assessment perspective, Brown reviews all the public, private, and company data that is available.
- The Plan – The nature of insurance requires details on how the company will execute on their vision, details beyond the “very rosy picture” companies use in their investment pitches. Brown seeks to understand the details of how a company will execute on their vision, short term, and long term.
III. Taxis and Rideshare = A Flawed Apples to Oranges Comparison
Rachel Allen, the head of Arity’s shared mobility group, explained that we can’t simply look at analog examples of mobility as proxies for shared mobility indications today, that we need to dig deeper into the context that affects how individuals and society will react. Allen used the comparison of taxis with rideshare services as an example of why the approach is fundamentally flawed because there is a culture already established around taxies in most places. While they are similar in concept – people providing people rides – the way rideshare has been introduced in each market results in different behavioral habits. Though both models include a vehicle and a driver, it’s critical to observe real data happening in real time because the actual situations are often counterintuitive, and the practice neutralizes our biases. Allen simply summarized the dynamic, “We don’t know the data until we see the data,” and that’s why analyzing real data in real time is invaluable.
Overall, the panel was a great discussion that brought to light the many challenges around insurance that the industry shares, from both the perspectives of shared mobility providers and insurance companies. It was clear that the attendees were very interested in the panel’s experiences, as there were a number of questions from attendees requesting additional guidance and insights on how to approach insurance and data to set their businesses up for success now and in the future. We look forward to the 2020 National Shared Mobility Summit when we can talk about how shared mobility has grown and continues to evolve.
Were you at the Summit? If so, what stood out for you? What are your thoughts on how risk affects the shared mobility industry? Please reach out and let’s continue the discussion.