New markets for the emerging Insurtech Industry: A wishlist for new age gig economy’s On Demand Delivery workers and “Pay to Ride” Drivers
If you (correctly) believe the permit medallion owners of the Taxi Industry hate change, it’s a fact the personal auto insurance industry hates change too.
Uber schooled the stakeholders in the ground transportation industry, and the world, that with the right momentum a mountain can be moved.
But while the ground transportation industry roadblocks to innovation began to disintegrate, “Mount Insurance Industry” refused to budge.
Taxi and limo drivers were still chained by outrageous commercial insurance premiums. Lyft and Uber drivers got the TNC Industry’s risk shift. Insurance officials appeared to be in a state of regulatory capture by both Uber AND personal car insurance industry stakeholders. (I believe Colorado was the only State that passed a TNC bill early on that actually REQUIRED insurers to offer a hybrid rideshare insurance product for TNC drivers.)
We heard Uber’s default response “Oh you know this technology is so new we are waiting for auto insurers to catch up.” (I called bullshit on that btw)
I also called bullshit everytime another TNC bill (written by Uber) was passed and PCIAA would start press releasing “Imperative legislation has been passed that protects the public and closes the TNC insurance gap grey areas”
I sent PCIAA an email and asked them to cease and desist making this false commercial advertising claim on behalf of the TNC Industry. I wasn’t a bit surprised when they never responded.
The only insurance gaps closed by the TNC bills that have already been passed protect TNCs like Uber and Lyft AND the personal auto insurance industry. No one is legally responsible when the driver turns his app off but THE DRIVER. During app on unmatched with fare period in most TNC legislation Uber and Lyft are only legally responsible for cheap insurance limits. As personal insurers don’t cover app on driving, THE DRIVER is PERSONALLY responsible for their un/underinsured liability during app on waiting for a fare match driving.
To be clear, when I say the Uber or Lyft driver is PERSONALLY responsible for ALOT of uncovered, unaccounted for financial responsibility, I am referring to the person at the bottom rungs of our workforce economy that TNCs (Uber Lyft) and the personal auto insurance industry has opted to shift their business risk to. The guy or girl who has NO ONE watching their liability back after an app on (no fare in car) or app off Uber crash that may be faced with having their minimum wage paycheck garnished til they are 90. Or may lose the small nest egg they socked away from a little power washing business they started.
Perfect example is the TNC driver who recently picked of a firetruck AND damaged multiple cars. This happened during the “app on waiting to matched with a fare” period. Lyft only is responsible for 25k and the Lyft drivers personal insurer is responsible FOR NOTHING. Ergo THE LYFT DRIVER is personally financially responsible for an additional $75k+ in liability and property damage from that crash…
Worse, if that Lyft driver owns a house or squirred away any kind of assets he may have to kiss them goodbye after a lawsuit and court costs.
Risk shift TNC driver faces after a “grey area” Uber Lyft accident:
- Loss of a house if you have one?
- Have your minimum wage paycheck garnished til your 90?
- Loss of your small savings or assets nest egg?
Does that sound “insurance gap close-y” to you? I didn’t think so.
But “my argument is flawed” you say? “Rideshare insurance is available now” you say? Yeah. About that…
If Rideshare insurance even exists in your market, it’s an additional cost endorsement over and above the cost of your personal auto policy (that you have to pay for every month but covers nothing and no one 24/7 if you use your car as a TNC)
Some Rideshare endorsements are spotty. Your probably have no PIP and your car damages may not be covered during certain coverage periods.
And if Florida is any indicator, Farmers Foremost boasted about FINIALLY bringing rideshare insurance here. They didn’t mention that if you get an Uber lease car your premium will be $565 a month. $165 MORE than a taxi insurance premium.
There is an ocean between “Available Rideshare Insurance” and an Uber or Lyft driver being able to afford to buy it. Especially with brutal Uber/Lyft fare cuts. And the offensive “Uber Pool” paycheck.
As no State has passed ordinances requiring Uber Lyft drivers to register their car at DMV as a TNC , “Pay to Ride”, or “For Hire” use vehicle- App Platform drivers can continue forgetting to mention to their insurer they drive for Uber or Lyft. And insurers can keep forgetting to make policy holders sign a waiver stating they are or are not a TNC driver (while still collecting billions in TNC drivers personal premiums insurers are in no danger of ever paying a dime out on)
From the get Uber had a huge set of dice they built their so called Biz Model on. The chances of a firetruck kind of crash mentioned above are few and far between. The auto insurance industry has their own huge set of dice. With the millions of Uber Lyft rides that are delivered in the US there have been an extremely small number of App On TNC driver crashes.
As far as off duty TNC driver crashes:
We can assume this type of Uber driver crash is not the norm. Most of these have been minor enough where personal insurers just looked the other way. Don’t ask. Don’t tell. The insurance industry’s collective unconscious decided minor off duty crashes were collateral damage that allow the faucet of the $$$ billions they collect in virtually risk free TNC driver’s personal premiums to remain open. The ace in the hole? It’s a solid bet that any policy holder with a four door car that has a major loss crash with be investigated after the fact for Uber Lyft activity. It’s win win for Uber and the auto insurance industry if a crash like this happens to an off duty Uber Lyft driver. Both the TNC and the TNC drivers insurer simply denies the claim. Nice work if you can get it.
Stay with me INSURTECH INNOVATORS, I am leading up to your role in all of this. Just pointing out that “Major Bad” crash lose for Gig on demand delivery drivers & “Pay to Ride” taxi, limo, TNC drivers is historically an extremely low percentage even with all the extra insurer defined “risky” driving we do. Let me make one last point about Uber’s (smoke and mirror) Million Dollar insurance coverage…
Uber’s Million Dollar Insurance (?) :
Ask yourself, “Self, why would Uber, who HATES paying out on insurance claims burst onto the scene with a Million Dollar insurance policy?”
- Uber had no choice. To fight the fight they engaged in existing taxi insurance regulations was a MAJOR hurdle
- It helped Uber keep the personal auto insurance industry’s resistance to their TNC market entry to a dull roar
- It helped snow regulators, TNC drivers, and the public as to serious insurance gaps and gave a PR false sense of safety perpetuated by the “fake news” media
But the biggest egg in Uber’s basket was the statistics from 80 years of taxi rides- In that period of time the number of people killed or seriously injured while a passenger in a cab, especially in ratio to the number of safe taxi rides completed in 80 years, was extremely low… A taxi or TNC driver does the safest driving while a passenger is in the car. This was not lost on Uber when they unvieled their Million dollar policy. Uber insurance liability business model is a crap game with winning odds.
My sales pitch to all you Insurtech Innovators on the horizon…
Ala Carte Liability Insurance for the new age gig economy On Demand Delivery & “Pay to Ride” drivers
I’m talking a monster MAJOR LOSS cheap premium group insurance policy for plus or minus 1 million driver workers nationwide
- Domino, Pizza Hut, Italian, and Chinese food delivery drivers
- Postmates drivers
- Doordash drivers
- Instacart drivers
- Amazon on demand delivery drivers
- Taxi drivers
- Limo Drivers
- Carpool drivers
- TNC drivers (Uber, Lyft, and all the new market entrants)
- Arcade City Drivers
- Ford shuttle drivers
- Personal aid drivers
- And anyone else I missed, but is self employed or an independent contractor in the so called sharing economy
Ala Carte Insurtech policy #1:
Rough numbers, lets say an Insurtech provider on the horizon sold 1 million policies with $25 montly premiums that cover the WORKER DRIVER’S PERSONSAL LIABILITY FOR DEATH AND REAL BODILY INJURY FOR AT FAULT ACCIDENTS… WITH NO CRIMINAL NEGLIGENCE (Not including soft tissue pain & suffering crap)
That equates to $25 million in monthly premium revenue. $300 million in annual premium revenue.
I will let you Insurtechies crunch the numbers with data you collect from the annual total of at fault worker driver Major Bad death and bodily injury crashes from the last 5 years. And the annual total amount of settlements insurance companies paid out on these crashes. Include Uber, Lyft, Taxi, Limo, Courier, and On Demand Delivery at fault worker driver crashes.
DO NOT INCLUDE death and bodily injury loss that was covered by Uber or Lyft while a passenger was in the car. DO INCLUDE IT if the driver was sued for liability over and above.
DO INCLUDE Uber Lyft worker drivers at fault accident while app was on but no passenger in car for any loss payout the drivers insurer had to pay out for death and bodily injury over and above what Uber and Lyfts policy covered.
DO INCLUDE any taxi or limo major loss death bodily injury crash payouts 24/7
Do Dominos and Pizza Hut off insurance while drivers on duty? Not sure how to crunch those numbers. That’s all you Insurtechies.
Ala Carte Insurtech policy #2:
Next Insurtechies, crunch the numbers on Collision that covers the workers drivers car. Get the crash loss stats for worker drivers body shop and totalled/car replacement/ and gap insurance for the last 5 years (Uber, Taxi, Dominos drivers etc). Why? Because driver workers want a monster group Car Collision insurance policy that specifically covers OUR cars (when Uber Lyft Taxi Insurance does not) Work with the 1 million policies at $25 bucks montly premiums figures, $300 million annual premium revenue. Crunch profit loss model.
Ala Carte Insurtech policy #3
And last Insurtechies, crunch the stats for PROPERTY DAMAGE including loss paid out to repair replace other cars damaged by an at fault worker driver accident. DO NOT INCLUDE property damage paid out by Uber and Lyft.
It’s past time to uberize “Mount Insurance Industry”
It’s past time to innovate insurance products for the old and new worker driver sharing economy
It’s past time to stop charging worker drivers on the bottom rungs of the economy ladder stupid high insurance premiums for services the public wants and needs. We should not have to lie to our insurers while remaining exposed to un/underinsured personal financial loss responsibility while major corporations and insurers line their pockets. It’s simply uncool.
I believe there is an Insurtechie out there that will do the above math and see there is a shitload of money to be made by creating affordable group innovative uberized insurance coverage products for the massive independent WORKER DRIVER INDUSTRY in the United States.
That’s my story and I’m sticking to it…