Wheeling and Dealing: how e-scooters could spin opportunities for insurers
E-scooters, or "Personal Light Electric Vehicles," have become increasingly popular on a global scale over recent years.
They are both compact and provide a sustainable mode of transport, whilst they are generally not subject to the tax or insurance requirements of other motor vehicles. This is potentially one of the reasons privately owned e-scooters are not legally allowed to be used on UK public roads. Their lack of pedals also makes them illegal for use on cycle lanes and pavements. So, unless you are using them for running circles around your back garden or balcony, the chances are you are using your e-scooter illegally. The Government has however recently announced that rental e-scooters are to be legal on UK roads from 4 July 2020. The Covid-19 pandemic appears to have pushed the government to fast-track e-scooter trials in the UK in order to reduce pressures on public transport once the lockdown is eased. This recent change in the law may well bring with it a significant opportunity for insurers to make their mark on the e-scooter craze.
Insurance became mandatory for the use of e-scooters in Germany and France in late 2019. With an expected market size of €90 billion for micromobility by 2030, it's no wonder that the UK, Ireland and Spain are currently reviewing their own guidelines in respect of the use and regulation of e-scooters. The opportunity for forward-thinking insurers to profit from this increasingly popular product and the service solutions it may offer is fast approaching.
In the first instance, insurers are going to want evidence of the potential risks associated with the use of e-scooters. Although the risks are difficult to calculate- the European Transport Safety Council (ETSC) has called for more and better data collection and analysis on the safety of e-scooters - claims as a result of e-scooters are increasing. Statistics in the Denmark and Austria show increasing rates of head injuries and collisions caused by accidents involving e-scooters, and e-scooter related injuries in the US increased 222% between 2014 and 2018. Additionally, a recent survey by Brussels Mobility showed that 75% of e-scooter journeys replaced walking or public transport, the shift from walking to the use of e-scooters actually causing a rise in the overall road risks. As current data suggests that the usage of e-scooters may actually increase risks on the road, the ETSC says further data is needed before making any decisions as to how the use of e-scooters can and should be regulated.
At a glance, potential areas which may require the attention of insurers may include product development, pricing and the development of pricing models to capture the new risks (as explored above), market distribution and claims. A potential increase in the purchase of expensive "designer" e-scooters may also see an uptake in policies to protect these vehicles from theft and damage. Breach of rules and regulations relating to speed and location restrictions, or failure to wear a helmet, would become inevitable and may also lead to future claims. The legalisation of the use of e-scooters is likely to bring with it the presence of e-scooter rental companies who will require insurance policies to limit their liability to their customers in the event of an accident.
With US e-scooter rental companies Bird and Lime and European companies Voi and Tier already in talks with the UK government, now is the time for insurers to increase their knowledge and expertise on the use of these "Personal Light Electric Vehicles", partner with the right organisations and solidify their presence in the market. By acting quickly in this increasingly desirable (and potentially soon-to-be-legal) mode of transport, insurers may soon have the opportunity to profit from the rise of this modern innovative product. This has become particularly topical given how overwhelmed Transport for London may be once travel restrictions are lifted and alternative modes of transport are both important and necessary.