Ensure you get insured: why the Sharing Economy needs to get its data right

Last week, I found myself, once again, at Level 39 enjoying a cookie and a cup of tea as I spoke to some of the newest startups launching in the Sharing Economy space, as well as some of the most established. Hosted by SEUK in collaboration with Intel, Osborne Clarke and XL Catlin, I was attending “Growing your sharing economy business: Intel Insights” – advice on how to grow your sharing economy business with a particular focus on insurance, investment and corporate engagement.

A panel of three speakers, chaired by Debbie Wosskow, delved into the complexities of growing a sharing economy business in the UK, inspiring a lively debate with the audience. Monopolising the conversation from all three perspectives, a common theme soon became apparent: whether you are looking for insurance, investment or a contract with a corporate business, there is one crucial golden nugget. Data.

This isn’t all that surprising. 9 out of 10 startups fail; everyone knows the stat and everyone wants to see proof that a start-up is the lucky tenth. Insurers want to see business models, investors want to hear about early growth indicators and corporate businesses expect a quantitative value proposition. Data is the key to limiting the risk in decision-making.

As a member of the Lean Analytics generation, I firmly believe that numbers and data should drive business decisions. However, the unfortunate truth that emerged from the conversation – and it’s something I see in startups every day – is that data just isn’t a key priority for startups, and certainly not in the structured way the big corporate world is used to.

So what are the challenges that prevent startups from giving big companies the numbers they want?

To begin with, there’s the fixation startups have with ‘Product’ and ‘Tech’. There is a great push for technology and the competitive advantage that it brings; data, to the shame of many, gets left on the side. It’s often a number of spreadsheets and some Google charts at best. One company even admitted that it only got round to hiring full time data analysts after its Series B round! Even if data is being collected and digested in a meaningful way, little attention is paid to analysing it unless such data is directly impacting the success of the company’s product. Quite honestly, its high importance does not register to most, not even to some of the most successful companies in the sector.

Secondly, there is a colossal challenge in putting those numbers together: even startups that are highly experienced in collecting and measuring data find that there is no straightforward way of bringing it together in a meaningful format in order to pull out valuable insights. Most startups find that they are balancing lots of different providers, each catering to specific areas of their business, and that these cannot be integrated with one another. While some tools are designed to combine all the information in one place, these are often inefficient and do not offer the insight big businesses require

These problems pose serious challenges to Sharing Economy companies, particularly when seeking insurance. The challenge often goes beyond the scope of individual companies: investors like models, but these require a decade to build and being relatively new to the market, sharing economy companies are often unable to provide them with the necessary volume of data. Admittedly, insurers face some big challenges when trying to understand a platform’s insurable interest. When there are three or more parties involved – the company, the service provider and the service user – it is not always clear what or who needs insuring.

So how can Sharing Economy companies overcome this challenge?

SEUK, a trade body for the Sharing Economy, is offering some valuable support on this front. By collecting data from various companies within the same industry, they can offer relevant knowledge, particularly to potential insurers, as to how they can invest and what needs insuring. They are also attracting more insurance companies as associate members, improving access to insurance for startups. One key step SEUK is pioneering is cooperation: sharing data and building a group with common interests. This will not only open access to insurance to many companies but it will also decrease the cost of insurance, inviting larger companies to contribute to the discussions, and might attract more insurance companies as associate members.

A particular business at the event shared their story of how they were forced to entirely change their business model and geographic location in order to be able to get the legally required insurance and survive in the harsh startup world – all their larger competitors were in a position to afford self-insurance. It was a fascinating story, but also a concerning one, which highlighted even more strongly the need for change.

Overall, the event painted a picture of an overcast sky with the sun peeking through from time to time. There are certainly some big challenges to opening the corporate and insurance world to the sharing economy. However, through a concerted effort to build up the quantitative information on the sharing economy, there will be opportunities to break down those challenges. Data is the first step.

Author image
Patrick is a Biz Dev at Onfido, and he's all about helping companies onboard more customers and prevent fraud. In his spare time, he learns code and hikes in the internet-less parts of this world.