Popular sharing economy companies remain popular among consumers according to GlobalData’s latest survey findings. Now they are playing an important role in designing insurance products that can be embedded into their platforms, thus improving convenience for the end-user. Airbnb is partnering with Generali in the US to offer travel insurance to its guests directly from its platform. This move highlights how traditional insurance distribution channels are ripe for disruption as embedded insurance grows.
According to GlobalData’s Q3 2022 Global Consumer Survey, 5.4% of US respondents stated that they stayed in short-term rental accommodation when they last went on holiday, which includes using platforms such as Airbnb, Vrbo, and onefinestay. While the sharing economy is disrupting travel, more traditional booking methods are still popular. In particular, stays at hotel chains and resorts continue to account for the largest proportion of bookings.
A key criticism faced by the insurance industry is that it has been slow to innovate products and improve the customer experience. Catering for digital natives who are more inclined to use online channels in their everyday life can be particularly challenging to insurers. The digital customer will be less patient with online channels that do not offer the same seamless experiences provided by savvy tech companies, including those in the sharing economy.
One viable solution is to partner with such companies and distribute insurance through their platforms, which are bound to offer a better customer journey than insurers’ own sites. Embedding insurance into a platform also offers greater convenience to customers – for instance, at the time of booking accommodation, insurance can also be taken out, making the whole experience faster. Yet this will come at a cost for insurers, as the marketplace platform acts as a third party.
As the sharing economy grows, more insurers will form partnerships with different marketplaces to take advantage of the opportunity. Airbnb’s travel insurance is currently available to users from the US, but the company expects to make it available in several European countries, including Italy, Germany, Spain, and the UK. The insurance policy provides a full refund when canceling a trip (be it domestic or abroad), a payment for travel delays, and for lost luggage. It also provides cover for medical expenses abroad. It is likely that other short-term rental platforms will follow the steps of Airbnb in the near future, embedding travel insurance for their hosts into their own sites.