The sharing economy was once a tiny subsector, merely an informal layer in the folds of cities.
It has grown into a lucrative market, with the value set to reach $355 billion by 2025.
With the establishment of platforms such as Airbnb and Uber, the popularity of sharing owned goods has shot up in the last decade. Between 2013 and 2025, peer-to-peer accommodation is expected to have an average annual growth of 31%. According to analytics companies STA and AirDNA, in 2020, Airbnb controlled 18% of the US lodging market.
“We are tending to see now that sharing activities are becoming more professionalized, and larger players are starting to get into these marketplaces,” said Louise Birritteri, CEO and founder of Pikl. This insurance company focuses primarily on the sharing economy.
In recent years there have been more instances of hotel groups and property developers using sites such as Airbnb as additional points of sale. In 2019, the platform announced a 152% increase in new listings that owners categorized as hotels and guesthouses.
Helping homeowners safely share their space
Insurance has been relatively slow to catch up to this rising demand, which initially stunted market growth.
“There was a growing economy where people wanted to share goods, but they were held back because it can be unsafe or people fear that if they lend their vehicle or their home, high-value assets like that, they could get damaged or lose them,” said Birritteri.
“I recognized insurance would be key to this market to help it grow and help more people join in the sharing of assets.”
Despite this need for insurance, Birritteri found that many people were not covered for the activities of the sharing economy.
“People sharing their home on Airbnb or other similar platforms will most likely be voiding their home insurance policy without realizing, and the insurance industry isn’t very good at making it clear,” she continued. Pikl was founded in response.
Launched in 2016 within the sharing economy hub of Norwich, the first UK city to win the sharing economy city of the year award, Birritteri led a group of insurance brokers to tackle the increasing demand for specialized coverage.
“Initially, we started in the Airbnb marketplace where there was quite a big regulatory problem brewing with people being able to get the right insurance,” she said.
“We have tried to resolve that problem by working with the insurance market to put in place solutions to properly identify people doing home-sharing and make sure people can get the right options offered.”
Since its conception, Pikl has developed a variety of options for the house-sharing market. They range from Airbnb insurance for individuals hosting short-term guests in their own home to insurance for property managers who have a portfolio of properties for short-term let, covering the full scope of the property sharing economy.
However, revolutionizing the industry is no small feat, and Birritteri accredits their success in part to the balance of experience and tech within her team.
“My team is all from insurance backgrounds, and I have an actuarial background working for some very large insurance companies. Between us, we have about 350 years of underwriting and pricing experience, so we are really experienced. But I’ve been trying to get a really good balance within the whole team and what I’ve done is pair that experience with a great tech team and really good technology.”
“When you approach insurance companies, you really have to have a strong, credible pitch. Given my team’s background and experience, we put together a solid pitch of what we were going to do and how we would make effective use of the insurance companies’ capital. I think this is what has allowed us to get so far.”
“We are credible, and we have put forward sensible solutions on how we will make this work, both from an insurance market perspective and the sharing economy side of things.”
Multiple entities have recognized their success, leading them to win the UK broker of the year award and the Insurance Times Insurance Start-Up award in 2019.
At the brink of the mobility revolution
Birritteri has no plans to stop just within the home-sharing sector. This year Pikl plans to launch various products focused on vehicle sharing.
The vehicle sharing sector has been present for some time. Companies such as Zipcar and Uber are well known globally and introduced the concept of creating personal income from sharing an individually owned vehicle.
With an increased focus on climate change objectives, it is likely to grow further. In 2022, the sector’s market share is projected to reach $12,947 million. The expected user base is set to 60.7 million users by 2026, meaning that specialized insurance to meet this may be important for further development growth.
“We started in the Airbnb marketplace and are just about to launch other products in the shared mobility space,” said Birritteri. “Now there is a real need for people to start using shared mobility so that we can cut carbon emissions and we can make more effective transportation systems in the cities.”
“Within that, you have issues in the insurance market that make it really hard for all members of the public to participate in vehicle sharing.”
Examples include clauses within car insurance that do not allow drivers under 25 years of age to drive under the same policy, which Pikl hopes to address head-on.
“Back in 2017, the sector was still very early in its development. We are just now getting to the point where people know that the mobility revolution is here to stay, and now it needs appropriate solutions.” Birritteri said.
Steps towards serving the fashion industry
In addition to this expansion, Birritteri also spoke of other products that focus on smaller sectors, which she believes are likely to boom in the coming decade.
Fashion sharing is a relatively new sector of the sharing economy that is gaining traction due to “fast fashion.”
Platforms such as Vinted and Depop have brought second-hand sales of fashion into the hands of the individual. As more awareness grows about the damaging effect of the “fast fashion” industry on the climate, more are turning to second-hand clothes. Resale platform, ThreadUp, has predicted global second-hand sales will amount to $51 Billion by 2023.
The concept of clothes rental and sharing within this sector is mainly focused on the occasional rental of garments from luxury clothing brands but increasingly becoming popular to cover all budgets.
Platforms such as Nuw have been launched within the past decade that create networks of clients who swap clothes in exchange for credits on the site, while Rent the Runway has gained international recognition for its membership which includes rental of many designer brands.
Here, Birritteri sees a need for insurance that covers garments sent out for rent. “We’ve not yet launched anything in this market, but we have had conversations with a number of different platforms which are trying to make it easier for people to share clothing,” said Birritteri.
“Particularly where there are designer items of higher value, they will be looking to make sure there’s some kind of insurance protection. If they get lost, stolen, or damaged beyond repair, they want that protection in place. We are looking at how we can make that possible from an insurance perspective.”
Future expansion for a more accessible sharing economy
Although currently only operating within the UK, Birritteri sees global growth on the horizon, especially in home and item sharing sectors.
“We are initially launching products in the B2B space, working directly with platforms. We would sell our products from the UK for worldwide coverage,” she said. “By doing this, we hope to learn where the biggest markets are that would benefit from B2C assistance so we can prioritize where we go next.”
By providing insurance options for the full scope of the sharing economy, Birritteri hopes to enhance its growth. “I hope the sharing economy will allow us to have sensible ways of thinking about transport and living and sustainable tourism,” she said. Her belief in its importance underpins the growth of Pikl into emerging sectors.
“It’s got to work for us to manage our assets with such a growing population properly, and I would like to see it getting easier and easier from a customer experience perspective to be able to do that. I look forward to that sort of environment; it will give people more independence.”
“I think people will be able to manage more independent businesses in rural areas and be able to earn money from sharing assets. It will give people more freedom and help the economy and the planet.”
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Isabelle is a creative project manager and freelance journalist with a BA Honours Degree in Architecture and a MA in Photography and Visual Media.
With over five years in the art and design sector, Isabelle has worked on various projects, writing for real estate development magazines and design websites, and project managing art industry initiatives. She has directed independent documentaries on artists and the esports sector and assisted in producing BBC Two’s Venice Biennale: Britain’s New Voices.
Isabelle’s interest in fintech comes from a yearning to understand the rapid digitalization of society and the potential it holds for our future, a topic she has addressed many times during her academic pursuits and journalistic career.