Growing new markets in the shared economy
Instead of fighting against the inevitable change, established businesses can find ways to benefit from the popularity of the shared economy. Gulshan Singh from IAG explains.
The rapid growth and popularity of collaborative consumption business models has largely been perceived as a threat to established industries. The most obvious example, the taxi industry, has waged a virtual war against ridesharing with varying degrees of success.
But does disruption need to be a bad thing for incumbents? IAG, Australia’s largest general insurer – and historically a traditional, conservative company – has taken the unusual view that the shared economy presents a range of opportunities for big business. Rather than fight against the change, organisations must evolve, adapt and find ways to support the new ways consumers are choosing to access services.
There are many features of the shared economy that larger organisations can learn and benefit from. While traditional financial service institutions continue to struggle with effective disclosure, the shared economy business models are able to offer complete transparency on pricing and structure. The new platforms tend to self impose standards and regulation measures. There is a general movement away from anonymous transactions with the incorporation of reputational mechanisms (eg. rating systems), user profiles, and various safety and security checks. With continual disruption of existing powerful industries, there has been the tendency for existing regulations to be used to protect private, rather than the public, interest.
Admittedly there are still risks to consumers that are likely to become more apparent as unfortunate incidents inevitably occur. As guarantees, bonds and insurance mechanisms that are incorporated into the sharing economy business platforms are tested, pressure will be placed on government to ensure new digital platforms are able to meet community safety standards.
Established businesses can benefit from the popularity of the shared economy by identifying gaps or new needs emerging from changing patterns of consumer behaviour. IAG recognised that conventional insurance products do not cater to the shared economy, potentially leaving consumers who use their assets in this way exposed. The Sharecover product was developed for home-sharing hosts to cover them for events that are excluded by standard home and landlord insurance policies. Similarly IAG has chosen to provide cover for customers who occasionally use their car for ridesharing.
As the shared economy continues to expand and advance into new sectors, businesses can correspondingly grow new markets of their own by innovating products and services to assist and support consumer participation in the shared economy.
Gulshan Singh is Manager of Public Policy & Industry Affairs Group Corporate Affairs at IAG.
