E-Hailing, a fast expanding line of insurance

Mike Mgodeli, Managing Director at Renasa Taxi Underwriting Managers or RTUSA talks to us about the E- hailing side of their business.

Tony: E-hailing has become a big business, transforming how people get around. Please give us some background on RTU and yourself. What brought you into this niche?

Mike: RTU had a massive portfolio within the E-hailing space, which we brought to Renasa through Jonathan Rosenberg, who graciously took on the challenge of a totally new market that, at that time, had been closed by a couple of insurers. The guys at Renasa embraced us as they had a traditional minibus market where they were covering vehicles in the public transport space. They saw the alignment with E-hailing and the growth opportunities. Renasa took us onboard, and we co-created what is currently RTU.

It’s a very well-balanced portfolio in this public transport market, which caters not only to your E-hailing passengers but also to the delivery side of it. From an RTU perspective, we have expanded our offering, for this particular market, from not only a purely asset element but to also include liability insurance cover.

Tony:  A large part of our audience is brokers, so how should they view this E-hailing insurance environment?

Mike: As soon as insurers or brokers hear E-hailing or Uber, they generally want to run away. However, more information is now available.  As RTU, and in testament to Renasa being “the broker’s best friend”, we only deal through brokers, and clients would therefore place their business with us that way.

As RTU, we’ve taken an approach to walk the journey with a client, as we generally are the risk experts. We’ve created multiple different types of products. So, we’ve got your stock standard product in this space, where it’s just your individual client who is coming in, with up to 10 vehicles and is rated from a black box perspective. We then also have some fleets, with close to 1000 vehicles on cover, which would be bespoke for that broker and the insured company. We also created products for the actual platforms, where we’ve identified a lot of the risk that would exist, not only for the asset as such, but also for the passenger and rider whilst on a trip. So, with the underwriting team we’ve got, we are always open to creating new markets and providing a good service to our insured.

Tony:  What are the main risks faced in this segment?

Mike: It is quite an interesting space that’s always evolving. There’s the platform rating element that creates a self-regulating mechanism between the driver and the rider and further on, to the platform. That really helps when it comes to platform-based cover. When I say platform-based cover, for instance with Uber, as a passenger, you’d be insured from the minute you enter that vehicle until you disembark that vehicle, should you have an accident or need medical assistance.

But the fundamental basis of the asset risk, which lies with the owner of the vehicle, or the person with insurable interest, is slightly different. Because on that side these guys, whilst on trip they are great most of the time, but then when they drop you and are rushing to the next ride or they have been driving for a long period of time, the exposure increases.

The slight difference from the minibus space, and I think where a lot of guys got it wrong, is that minibus taxis generally operate within a set period of time. And as the road users, we generally fear them. When you see a taxi running down at you, you give them space. These guys are driving the very same route, day in and day out, so they know that road, they know how quickly that robot changes. There is also some form of an accountability factor from an owner perspective to the driver. In a way it’s a community. You can’t just rock up and be a driver for someone, these taxi guys are informalised businessmen and they know that business so well.

In the E-hailing space, where it’s slightly different, you’ve got professionals like me and you trying to make a buck, extra cash on the side. I can get access to a vehicle, and I’ve got no understanding of managing people or of selecting the right drivers. I’ve got no understanding of maintaining my vehicle. So that becomes another risk in itself, where you are starting to find there’s a big difference, even from our rating perspective, between an owner driven vehicle and a vehicle driven by an employee, for lack of a better description. There are two distinct types of risks on that. So it’s a very complex but also interesting space to underwrite and trade products.

Tony: From a broker perspective, how do you overcome these complications through your relationships with them?

Mike: We generally walk a very close journey with a broker. Each person has a particular need. As I’ve mentioned to you initially, we’ve got our own rating engine that has taken on a lot of driving time and data, just from previous experiences to say to the broker, you put in this information, and we can give you a good rate or we can advise you on how to go about ensuring this client.

When it comes to guys with fleets, we would walk the journey with a broker. Obviously, the broker would be the risk expert, in the sense of giving the advice to the policyholder, and we are able to co-create what works for them and tailor make a product for that particular client.

Tony: In closing, the pandemic affected everyone, and there’s been a lot less movement of people. How did this affect your business during this time and what sort of concessions did you have to give to your clients?

Mike: The pandemic caught us by surprise and on our side, in the initial hard lockdown, our insureds were negatively impacted, especially just in the movement of people. So, from the taxi perspective and the E-hailing, with the curfews, there wasn’t really much movement of business happening for these guys. This meant that it limited the earning potential and what they were able to earn. From our side, looking at the exposure that we had, we then passed on the benefits, obviously, when there’s no vehicles on the road, there’s less claims, there’s less exposure. So, with that, we were able to reduce the premiums up to 50% during the hard lockdown months and pass that back to our clients.

But I think, having worked with a lot of the brokers, it was a sharing of the risk and the guys understanding that retaining these partners of ours is important compared to just cutting them off and trying to re-sign them up.

So, I think, in a way it was a very positive thing for our relationship, one with policyholders, the brokers, ourselves and the insurers. There were some positives out of this, where we’ve seen a growth in the gig economy. A lot of people, now that we’re working flextime and working from home, are moving away from the need of owning a vehicle.

I think, in the market itself, it’s probably the space with the highest growth potential compared to your traditional short term or non-life insurance products.