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Posted in Mobility Insurance, on 02/27/2020

Risk as a Competitive Advantage

Understanding and effectively managing risk - the secret to profitability for shared mobility platforms.

With rising scrutiny from investors and an increasing number of competitors, many tech industry leaders are feeling the heat when it comes to profitability. However, one industry segment is feeling it more than ever - shared mobility platforms.

Part 1: What is the issue?

It’s clear that one of the biggest profitability challenges for mobility platforms is keeping their operational and insurance costs under control. Eelco van de Wiel, Managing Director of FI insurance, stated in a recent FleetEurope story that “fleet-owners and leasing companies [in Europe] are seeing premium increases of between 10 and 100%.” With cost increases of this size, it’s not hard to see the severity of the situation.

The following examples demonstrate the devastating impact of this situation on shared mobility platforms:

Based on the evidence, it’s clear that emerging mobility platforms must do something to reduce their operational costs, of which insurance is a huge part, in order to make it to profitability.

Part 2: How can mobility platforms address this issue?

How can mobility platforms address this issue and move the needle closer to profitability? By understanding and effectively managing risk.

After all, there are really only 2 things companies can do with risk:

  • Transfer (e.g. insurance)
  • Retain (e.g. self-insure or pay out of pocket)

If companies can effectively manage their transferred and retained risk well, then they can achieve lower unit economics than their competitors and gain both market share and profitability. We would argue, if they can reduce that cost quicker than their industry peers, they have a competitive advantage.

The ability to manage risk and optimize insurance costs relies exclusively on having the data to understand the risk, something that is historically very difficult. However, with the emergence of connected vehicle data, things have changed.

Even Elon Musk, CEO of Tesla, would appear to agree. He recently stated that he believes the cost of insurance is too high and that the issue is a direct result of insurance companies not having access to enough data. He went so far as to say that he felt Tesla would have a serious advantage over incumbent insurers as his team enters the insurance game. As Tesla vehicles are all connected, they will have access to real-time data on the driver and their habits which can inform the insurance team and offer better insurance rates.

Part 3: How can Trōv help?

Our Mobility Risk Platform ingests data, like vehicle sensor, street and driver data, to provide a real time view of the mobility fleet's risk. That data powers three important benefits;

  • Insurance right-sized to the fleet's actual risk in real-time.
  • Digital triage of the constant in-flow of risk-related incidents from the field.
  • Powerful algorithm powered analytics that predict, and thus enable avoidance of risk.

Knowing the fleet's true risk, in real time, enables the fleet operator to proactively reduce risks, and hence cost. And the good news is that winning the race to be the safest has the benefit of getting ahead in the race to become profitable!

If you’re interested in learning more about Trōv Mobility Insurance, check out our mobility page or reach out to us at mobility@trov.com.

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