Risk and the Sharing Economy

By Andrew Fletcher - December 04, 2019

The Sharing Economy has risen in popularity globally over the last decade, creating two substantial challenges for insurance providers. Read on to see how platforms such as Quest Fleet can help solve these issues.

The practice of operating a fleet of vehicles can be a stressful one, especially with rising repair and maintenance costs discussed previously. Nowhere are the challenges of fleet safety optimisation more obvious than in the sharing economy. 

According to Sharing Economy UK, the UK’s trade body for this sector, a sharing economy company is any organisation that ‘enables people to trade space, skills and stuff’. In the automotive sphere, this relates to the many ride-sharing companies that have risen in popularity globally over the last decade. Ride-sharing companies offer various services, such as:

1. Rent out company vehicles in a traditional B2C model

2. Allow people to rent out their own vehicles

3. Allow drivers to carpool using their own vehicles

There is immense value to be found in nurturing the sharing economy. It can disrupt entrenched business models, reduce material waste and ease the financial strain of ownership on consumers. However, the market faces two substantial challenges which affect its relationship with insurance providers.

1. With a large and ever-changing user base, measuring and managing ongoing driver risk can be a challenge.

2. Even when risk-diminishing measures have been taken, Insurers can fail to understand the objectives of sharing economy companies.

As a result, many Operators find themselves spending significant CapEx on day-to-day insurance costs. One former entrepreneur in this field informed Concirrus that as much as 40 percent of his company’s daily expenditure was spent on insurance.

The solution to these challenges is two-fold:

1. Give sharing economy companies greater insight into the driving behaviour of their users in order to understand, quantify and mitigate driver risk before costly incidents occur. When an incident takes place, sharing economy companies must be able to demonstrate a capacity to report and settle them quickly.

2. Sharing economy companies need to be provided with the tools to act on user data in a way that informs and demonstrates a diminished risk profile to Insurers. This will allow Operators to gain leverage in insurance negotiations that they have previously lacked. 

Active Risk Management (ARM) and First Notification of Loss (FNOL)

Driver data is the most valuable asset available to a Fleet Operator. It allows for a proactive approach to risk management over simply responding to incidents. There are plenty of data points available to Operators within the sharing economy, including the mobile apps these services operate through, or from telematics systems and devices already installed in vehicles. Many Operators are already collecting the data they need to understand which users are most at risk of being involved in an incident. The issue therefore isn’t about data collation, but interpretation. Big data and analytics platforms, such as Quest Fleet can provide a solution. Being hardware-agnostic, they can ingest data from multiple sources and present detailed insight through an intuitive user interface. The use of such platforms gives operators an in-depth view of driver risk and can provide them with the tools to manage exposure. Quest does this by interpreting driver behaviour and allowing operators to alert drivers who are deemed high risk. Good driving behaviour can be rewarded, acting as an incentive for drivers to improve. These tools are important for sharing economy operators as they gain a greater understanding of each drivers’ unique risk profile within a wide-ranging driver pool. Messages can be fully automated, allowing companies with an ever-growing user base to continue to scale without exposure to unnecessary risk. The ability to analyse and influence drivers within a driver pool means that operators within the sharing economy can continually manage overall exposure.

When the worst happens, and an unpredictable incident occurs, reporting and handling a claim quickly can demonstrably reduce its impact on a fleet’s operating losses. An automated FNOL notification ensures Operators can manage collisions as quickly as possible. This greatly improves customer service, boosting customer confidence. In a challenging market, reputational and financial benefits can be invaluable in terms of competition, investment and retention.


Reducing the risk profile of drivers can pay dividends in terms of user trust and operating costs. It is the ability to challenge conventional wisdom, however, that will truly diminish the long-term expenses experienced within the market.

Even though Operators can take measures to manage the risk profile of their drivers, Insurers are, by their very nature, risk averse. The prospect of insuring an ever-growing fleet of vehicles, driven by a varied and unpredictable driver-base, is not appealing to such a market. Sharing economy companies are assumed to be higher-risk investments when compared to conventional commercial fleets. Insurers therefore often charge premiums above and beyond those Operators consider to be reasonable.

The data collected by sharing economy companies can disprove such a view. Big data and analytics platforms can connect Operator data to Insurers in order to share valuable insight. As a sharing economy company’s overall risk is diminished through ARM and FNOL functionality, Insurers can view and measure diminishing exposure in real-time. This means sharing economy Operators can prove that they are low-risk investments, while Insurers gain the peace of mind. Understanding risk in detail as it happens means Insurers can write more generous terms which align with real-time metrics. As sharing economy Operators grow, Insurers can also scale and expand their share of the market with little extra risk to loss ratios. 


It’s always been the role of the entrepreneur to innovate and improve. When it comes to transport, it’s clear that one of the most effective ways to do so is via sharing economy business models. However, Operators face the challenges of working as 21st Century companies within a 20th Century framework. Embracing big data and the insight it brings can provide sharing economy Operators with all the support they need from Insurers to gain an advantage in a highly competitive marketplace.

For more on risk within the sharing economy market, feel free to get in touch via email or LinkedIn.

Learn more about Quest Fleet by registering for our launch event or alternatively visit our website.


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