The Importance of Insurance in the Mobility World

Keeping up with the rapid expansion of micromobilitiy has its own unique individual challenges among cities and insurers. As e-scooters and e-bikes multiply, cities are diligently working out traffic laws, best practices, and public safety measures.

Below, we interviewed Brandon Schuh from Christensen Group detailing the significance of insurance in the micromobility space.

Brandon Schuh from Christensen Group.

Why is insurance so important in the mobility space?

Mobility is a high hazard area in general, mostly due to the risk of auto collisions. We’ve seen a steady rise in the cost of auto claims over the last ten years for a variety of reasons including an exponential increase in medical trends, the increased cost of auto repairs (from advancements in technology), and the increase in congestion across the country and world.

With micromobility, the risk of bodily injury and collisions with automobiles continues to be present. You could argue that the rider here is less insulated and more exposed to injury in the event an accident occurs. The risk that the micromobility rider brings to the equation is limited; cars still being the most significant factor. These factors make insurance of paramount importance. They also make it expensive. Operators that can demonstrate a high commitment to safety, risk management, data collection will benefit the greatest in the insurance procurement process. What should every insurance policy have?

In the micromobility space, insurance policies should be forward-looking. There is a tendency by companies in the start-up space to look at insurance as a simple transaction. In areas of high claims frequency, however, insurance should be viewed as a strategic financial lever. Depending on how you structure your insurance program, and what alternative risk vehicles are being used, insurance can also be a revenue driver for companies (like micromobility) that are consumer-facing. Making sure there is appropriate risk transfer between the operator and the insurance carrier is important; I would argue that when the operator takes more risk and puts more preverbal “skin in the game” the better the relationship typically works. I was a risk manager for nearly ten years in a highly litigated space and can tell you that control is key. The more control an operator has over decisions made within their insurance program, the better the financial outcome. Nobody knows your product, your company, or your culture better than you (the operator) do. Placing yourself in the driver’s seat will lead to the best posturing in terms of premium and claims costs.

What are the hidden landmines in insurance?

I’d revert back to my previous example where oftentimes, insurance is simply viewed as a means to an end. I think the broker/client relationship is really important. Picking a broker that has the experience, relationships, and most of all, creativity. Insurance and risk management is a year-round job with emerging trends and new markets. Like the businesses that insurance companies cover, the carriers themselves have to innovate alongside them. If the broker isn’t acutely aware of what’s happening in the space, then the operator may be missing out. The days of hiring your brothers’ cousin who is an agent down the road are probably over, for the most part. Expertise plays a really fundamental role in the industry now. I have two main specialties – product liability and sharing economy risks. And they’re not too dissimilar as they both deal with claims frequency and severity – likely more than any other business model. How has insurance been changing?

Specific to the sharing economy – insurance is becoming much more in-sync with the industry. We’re looking at more and more ways to underwrite risk based on usage instead of factors like sales. An example would be per mile or per minute underwriting basis. Charging the customer for the time that their riders actually spend on the vehicles instead of looking at how much money they’re making. It’s a way to isolate risk more effectively. Insurance is innovating right alongside the technology companies. It’s an exciting time for insurance nerds.

What makes your approach unique?

There was an old commercial on daytime television here in Minneapolis for a bankruptcy attorney. His slogan was “It’s all I do and I do it well”. I like to think that I follow a similar approach to insurance; all I do is difficult product liability and sharing economy risks. The more you have the experience, relationships, and work in a space, the better you are at servicing and broking that risk. Since my days at Gorilla Ladders, where I was the Risk Manager, I’ve been working in industries where “risk and insurance” are the top strategic initiatives. I’ve sat on ANSI committees, overseen testing and manufacturing safety infinitives, worked with retailers and large legal departments, sat through about fifty trials, mediations, etc. My approach is just knowing more than my competition. I consider myself a risk and insurance consultant and often times I’m the first person my clients go to with questions in any of these areas. How does working with the Christensen Group and Movatic provide unique advantages?

Both firms work extensively in the micromobility and sharing economy space. Christensen Group (CG) is a pretty unique brokerage. We’re an ESOP so we are 100% owned by our employees. We’re one of the largest privately-owned brokerages in the US. With so much broker consolidation, we really view this as a huge advantage. Employee retention is a big deal in this industry. Employees (team members) really don’t like being gobbled up by mega brokers. Talent acquisition is a key element to the success of our business, and the best talent is usually much more entrepreneurial-minded; much like the space we insure. So CG is in a unique position to continue to gain market share over our competitors that are trying to create conglomerations via acquisition. We are much more client-focused and not beholden to a stock price.

In closing, here are a few helpful tips for safe riding:

Share space: Respect the people around you by allowing adequate space when passing. If you're ever on the road, follow the road rules.

Take your time: If you’re new to e-bikes and e-scooters, get a general feel for them first and find your groove before you go racing off down the sidewalk.

Have fun: Most importantly, enjoy being out and about and trying something that may be new to you.

These tips may sound simple, but maybe an awareness campaign around the risks of e-bikes and e-scooters is an appropriate place to start for cities across the world as they continue to wrap their heads around the ever-evolving micromobility trends.