What is the future of ridesharing insurance in Canada?

Once autonomous vehicle technology becomes commercially feasible for public transportation, it will be widely adopted, predicts Obaid Rahman, vice president of commercial underwriting and specialty lines at Economical Insurance.

“In my view, when autonomous technology is commercially viable for public transportation, the propitious economics of the model will result in widespread adoption,” Rahman told Canadian Underwriter Wednesday.

Rahman was responding to a question about what the future of ridesharing insurance looks like, especially if more traditional models of auto insurance don’t apply as more consumers start using transportation network companies (TNCs) and other forms of transportation. “The big change will likely come when mobility evolves towards autonomous vehicles and we see how transportation adapts.”

Related: How possible is a hybrid insurance model for the sharing economy?

Rahman noted that insurers have already adjusted their models to underwrite the sharing economy via data, technology, and usage-based underwriting. “The models are also agile enough to adapt to the introduction of new digital services,” he said, adding that new delivery services have entered the marketplace seamlessly in recent years.

The abundance of data available for underwriting for the sharing economy means that data can easily de-mark what is commercial and personal vehicle use, Rahman said in an interview earlier in August. “That gives you the perfect match between pricing for the right amount of exposure, and it also works from the customer side of things: You only pay for the actual exposure you are incurring,” he said. “It makes their model economically viable.”

While the ridesharing insurance structure in Canada is slightly different by province, overall it provides the same level of coverage while the vehicle is being used for ridesharing, Rahman said. “The coverage provided is in line with what is required for public transportation across Canada,” he said. “There are no coverage gaps between commercial and personal insurance.

Related: Economical to take over commercial ridesharing insurance coverage from Intact

“This system is working well for insurers, [TNCs], rideshare drivers, and, most importantly, passengers. Limits and coverages are appropriate to provide peace of mind and protection.”

Waterloo, Ont.-based Economical announced Aug. 18 that it will be replacing Intact Insurance as the commercial auto insurer for Uber in four Canadian provinces, effective Sept. 1. Intact Insurance and belairdirect will continue to allow customers with a personal auto policy to participate in ridesharing.

The commercial product will provide coverage for Uber Rides and delivery of goods service Uber Eats in Alberta, Ontario, Quebec and Nova Scotia (in Nova Scotia, coverage is only for Uber Eats, as Uber Rides doesn’t operate in the province).

Feature image by iStock.com/Leonardo Patrizi