iii. The rise of the sharing economy iv. Colonising the entire value chain In recent years, the sharing economy has evolved from a As we have seen, most of the InsurTech start-ups emerging to means through which family and friends transact to a move- date have been enablers rather than disruptors. But while start- ment of global businesses that include household names with ups may currently focus on single elements of the value chain, valuations in the billions. And given the familiarity of consum- namely distribution, over time the new entrants will collectively ers with the likes of Uber and Airbnb, other start-ups in this cover the waterfront. Insurers risk being reduced to risk carriers area will find it easier to gain momentum. PwC estimates that forced to survive on ever-shrinking margins, a threat that they are global revenues from five key sharing sectors (P2P finance, on- acutely aware of: 73% of insurers stated that the increased pres- line staffing, P2P travel, car sharing and music streaming) could sure on margins was the greatest threat posed by InsurTechs. increase to approximately $335 billion globally by 2025. “Vertical software-as-a-service integration models can be high- The sharing economy has the potential to not only change ly disruptive - think of Opentable’s approach to restaurants, but how insurers manage risk in the future (flexible insurance pol- for insurance,” says Ben Britt of Route66. “A great deal of the in- icies which cover both private and occasional commercial use) surance value chain revenue is under threat of being compressed but also bring about new insurance models where like-minded into part of a vertical-centric software solution; these solutions consumers come together to pool their risk solve a multitude of their customers’ unique pain points, and en- This may not happen overnight. There will be regulatory bar- able them to provide a full-scale experience that insurance play- riers to overcome and as companies scale up, they will have to ers will struggle to match.” find ways of maintaining their authenticity and uniqueness. Still The transparency and choice that InsurTech offers to consum- this isn’t a phenomenon that incumbents can afford to ignore. ers threatens the same result, as the balance of power shifts. In- surers unable to respond to consumers who are empowered and engaged risk further erosion of margins. Exploiting data more suc- cessfully may be one such response. 33