The growth of the sharing economy is introducing new variables when it comes to determining liability, creating risks for both the companies facilitating peer-to-peer exchanges and the participants in the transaction. Often many parties are involved in these transactions, which creates difficult questions of liability. With the addition of autonomous technology and artificial intelligence into these transactions, even more complex liability scenarios are arising.
To remain competitive in today’s rapidly changing sharing economy environment, businesses must reassess exposures, review existing coverage, and create stronger risk mitigation strategies. Taking a more proactive approach can help offset the potential for severe legal and financial consequences in the event of bodily injury, property damage, or other losses.
At Marsh, we’ll help your company create an insurance and risk management program that enables you to better anticipate and mitigate your sharing economy risks. By working with our specialists, your organization can be positioned to anticipate challenges to your business model and capitalize on emerging opportunities within this growing industry.
The sharing economy poses several significant risks for companies, which could threaten opportunities for growth and harm reputation if not addressed:
Bodily injury: The sharing economy is changing the traditional relationship between parties in a transaction. Individuals are engaging with technology to participate in a sharing transaction – either as a provider of a service or the user of a service. However, the traditional two-party transaction is now expanding to multiple parties. In addition to the provider and the user, the tech platform is now a part of the transaction. Depending on the service provided, a restaurant, autonomous vehicle, apartment building, or other parties may also be involved. In the event of an injury, determining liability and identifying the right coverage can be very complex.
Cyber risk: While technology enables and powers the sharing economy, the failure of technology to perform due to a cyberattack or technology failure is also one of its biggest risks. Sharing economy platforms frequently store personal information and payment information, making them valuable targets for cybercriminals looking for data. The rise of ransomware attacks across all industries should be of great concern to sharing economy companies. An attack that disables your platform would effectively cut off all revenue streams.
Regulatory risk: The innovations that sharing economy companies bring to a particular industry are also very disruptive. As traditional players in an industry are threatened by these new business models, they may turn to regulators to help protect their market share, especially already highly-regulated industries such as transportation and housing. Sharing economy companies also tend to rely on contractors to complete transactions. However, there have been court challenges around the world to classify these workers as employees, not contractors. Changing the classification of sharing economy workers would dramatically shift the business model and the risk profile.