In the rapidly evolving digital and sharing economy, companies encounter unique risks that traditional insurance models often fail to address effectively. These risks, which frequently arise from physical interactions facilitated by technology, can lead to higher insurance premiums or even a lack of interest from insurers. Moreover, these companies often face stringent regulatory requirements, which can complicate the insurance procurement process and drive-up costs. However, by leveraging operational data and advanced pricing segmentation, risk managers can optimize insurance expenses and better protect their balance sheets.
To address these risks, digital and sharing economy companies can partner with their broker and insurers to introduce pricing segmentation. Pricing segmentation involves an insurance carrier breaking down the company’s operations into specific, granular categories and using detailed data to price insurance programs more accurately. For example, a company with a large fleet of commercial vehicles can provide insurers with data on vehicle type, driver history and location to enable the insurer to create a more precise pricing model.
By providing insurance carriers with a clear and detailed understanding of the risks involved, companies can ensure that their insurance coverage is both accurate and tailored to their needs. This approach not only helps control costs but also allows for real-time adjustments based on operational changes. For instance, if one vehicle type is more expensive to insure, the company can reallocate resources to more cost-effective options, thereby optimizing their insurance spending.
The benefits of segmentation extend to insurance carriers. Pricing segmentation allows carriers to set premiums that closely reflect the risks they are insuring. This leads to more efficient pricing and better risk management, ultimately resulting in a more stable and sustainable insurance market.
Risk managers in the digital economy can take several steps to improve insurance expenses and protect their balance sheets:
By implementing these strategies, risk managers can navigate the complex insurance landscape of the digital and sharing economy more effectively, ensuring that their companies are well-protected.
WTW hopes you found the general information provided in this publication informative and helpful. The information contained herein isn’t intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you’d like more information regarding your insurance coverage, please don’t hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
