COVID-19 has limited the need to own a private vehicle due to country-wide lockdowns and continuing home working arrangements. This will cause more consumers to consider new models of vehicle ownership that they would not have done previously. Is COVID-19 going to inspire more car sharing?
Earlier in 2020, government-imposed lockdowns as a result of COVID-19 had a profound effect on the number of cars being operated on a day-to-day basis. While lockdowns have been lifted for the most part, the greater number of individuals working from home on a regular basis will reduce the need to own a private vehicle. This creates more opportunities for car-sharing firms like Zipcar and Turo to increase their customer base after COVID-19.
The proportion of consumers using car-sharing schemes has been low over the past few years, and their popularity has not been growing.
In 2019, 5.9% of UK consumers used a car-sharing scheme, up by only 0.3 percentage points from 2017 according to GlobalData’s UK Insurance Consumer Surveys. However, this is set to change in 2020, with Zipcar reportedly adding hundreds of cars to its fleet every week according to the Guardian.
This has implications for the insurance industry. As more people turn to car-sharing schemes for their transportation needs, this will reduce the number of private motor insurance policies in force.
In their place, insurers will need to provide short-term policies for drivers using these services. Insurers that can partner with car-sharing companies to offer insurance at the time of booking will be much better placed to capitalise on the shift in consumer behaviour. This also creates more opportunities for insurtechs, key players in the usage-based insurance space. This change in behaviour will be concentrated in cities, where individuals are able to conduct their daily business without the use of a car and will only need one occasionally.
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However, car-sharing schemes will have hurdles to overcome. Customers must be confident that the cars are properly cleaned and sanitised after each use. And with the global community now more aware of health risks, vehicle owners may face increased premiums as insurers look to protect themselves from liability claims should someone contract an illness while using the service.