Overview of the On-Demand industry

On-demand economy is a simple concept based on the idea of supplying consumers with a product or service they’re familiar with, but providing it faster and more intuitively than the industry ever has. Driven in part by the ease of use provided by app-based platforms.

On-demand companies are often grouped with shared economy companies, and in most cases the terms are synonymous. The shared economy refers to companies who offer products that are shared among users/members. AirBnB, Getaround and Jump Bikes are all examples of this, but so are Uber, Lyft and SideCar.

All of this leads to an industry that is projecting exponential growth. By some estimates, shared economy companies could be generating revenues of $335 billion globally as soon as 2025. Emerging markets are more accessible to on-demand companies and many of these markets are ready and willing to join the fun.

Often the backbone any on-demand company is data, and with that comes some inherent risks. Any services provided through digital platforms have the ability to fail. That means a third party like a customer can suffer a loss, financial or otherwise. Additionally, unique risks are posed depending on the service offered that can range from customer injury to theft.

Some of the biggest risks On-Demand companies face

Data Breaches

Data breaches are when sensitive information is data is copied, transmitted, viewed, stolen or used by an individual unauthorized to do so. IBM study estimated that the average cost for companies who are victims of cyber attacks is a whopping $141 per record. Just look at what happened to Uber in 2016 when 57 million users data was stolen.

Cyber Attacks

On-demand companies are often victims of cybercrime such as DDoS attacks and randsomewear attacks. These attacks can lead to data being stolen or destroyed in addition to major service outages. According to a report from Kaspersky Labs the average cost of a cyber attack for enterprises grew from $1.2 million in 2016 to $1.3 million in 2017

System Failures

By nature on-demand companies are heavily reliant on back end & front end systems and third party services providers like AWS for their applications, servers and data services. Any outages, downtimes or failures can result in lawsuits from customers and independent contractors who rely on their platforms to run their business.

Why is Insurance for On-Demand Companies Important?

Every on-demand company is different but they all share (at least) two common exposures: technology professional liability and cyber liability. The possibility of a system failure or hacking attack is always there too and any on-demand company that has to shut down temporarily runs the risk of losing money and customers.  Cyber extortion and ransomware appear in the headlines on a monthly basis.

And don’t forget about data breaches! These gems can cost companies millions of dollars in legal, forensic, and consulting expenses. Uber found this out first hand in 2016 when they had to put executives in front of congressional panels following a breach and the questionable handling of its fallout.

But there are also risks that are unique to each company. An on-demand car-sharing company will need to make sure it and its drivers have adequate auto insurance. A bike share company will need to have products liability insurance in case someone is hurt when a bike breaks. Many different types of companies use proprietary code that they’ll want to protect if someone sues for intellectual property infringement (or if someone infringes on their rights). An on-demand dog sitter will need to have the right general liability insurance in place in the unfortunate event that one of the pooches gets hurt.

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