Insurance Companies and the Ride Share Market
Laura Maxwell

Insurance Companies and the Ride Share Market

Laura Maxwell November 18, 2015 Posted in: Blog Posts, Ridesharing
Transportation Network Companies (TNC) continue to expand by increasing the number of users and locations. Insurance industry associations, major insurance companies and TNC drafted a model bill which they sent to policymakers across the United States outlining the need for insurance to cover the three ride sharing periods. This is an opportunity for insurers to develop new products to cover this exposure. Three companies have made rate filings in California to cover this exposure.
In January, the California Department of Insurance (CDI) approved Metromile’s rate filing to add a new coverage endorsement to their personal auto policy. This endorsement provides coverage during Period 1. The rule page show factors of 1.00 for personal and TNC use. The filing memorandum states that there is no credible data to select a higher or lower factor at this time and that they will monitor the experience for possible future rate adjustments. The filing memorandum also states that miles driven during Periods 2 and 3 will not be counted in the rating of the vehicle. This removes duplication of coverage while the vehicle is covered under the TNC’s commercial policy.

Farmers Specialty Insurance Company’s rate filing was approved by the CDI in May. Farmers proposed an 8% factor to reflect the additional exposure of drivers being in unfamiliar areas and driving more at night. The factor is applied to all coverages. They relied on analysis of confidential data provided by a TNC.

Both Metromile and Farmers are only providing coverage for Period 1 with their product. The rate filing by Metropolitan Direct Property & Casualty Insurance Company was approved in October and is designed to provide coverage for all three periods. Furthermore, the Metropolitan coverage is being provided only to drivers affiliated with Lyft; the coverage provided by Metromile and Farmers is being made available to any TNC driver.

Metropolitan’s “Lyft Endorsement” removes the exclusion for carrying persons for a charge when the registered and active Lyft driver is logged into the Lyft platform. Lyft endorsement factors apply to bodily injury, property damage, medical payments, uninsured motorists, comprehensive, collision and towing. The Lyft endorsement factors range from 1.05 to 3.25 depending on the vehicles total annual mileage and Lyft annual mileage. The driver may also purchase coverage for sound receiving and transmitting equipment, vehicle conversion or customization and substitute transportation. The coverage factor options range from 1.06 to 2.80 depending on the Lyft annual mileage. The Lyft mileage is for Period 3 and will be provided by Lyft.

Other insurers are also offering rideshare policies. Allstate, Erie, GEICO, Progressive and USAA offer coverage in several states. Erie includes ridesharing as a “business use” and offers coverage for all three periods. Progressive’s ride share policy also covers all three periods but is only for Lyft drivers. The states vary by company and coverage keeps increasing.

lmaxwell@pinnacleactuaries.com

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