As MOVE 2023 approaches, Aon – a leading insurance broker and risk management business, and a diamond sponsor of this year’s show – looks at the risks and challenges mobility businesses face and the innovative ways in which those risks can be managed and mitigated, while also using insurance capital to create additional value.
For the many mobility businesses represented at MOVE 2023, the story will be about fast-paced growth; the ability to go from start-up to a mature business that can rapidly scale in it chosen markets and locations. It’s an exciting journey but rarely one without risks and pitfalls, which is one reason why Aon is enthusiastically partnering many new mobility clients to help them safely navigate the challenges ahead. “We understand the journey mobility businesses are on,” says Herbert Jansse – Aon’s Head of Digital for EMEA, “and we want to be there for them whether it’s helping to provide insurance risk transfer products for the businesses themselves or their clients, advising on how to retain or recruit the best talent, how to leverage intellectual property to support debt financing, and even how to manage the changing regulatory requirements.”
An optimistic outlook
Despite the expected global downturn and difficult economic challenges, the outlook for the mobility sector is more encouraging given, for example, the expectation for growth of mobility platforms and solutions in Europe. “Densely populated cities in Europe continue to restrict conventionally fuelled cars from city centres and the expectation is that bike, scooter and moped sharing/rental will double or triple over the next three to five years,” says Jansse. “Add in the expected growth for other mobility solutions like the use of micro-cars and there is a lot to be optimistic about.” And it’s that wide-ranging nature of the sector which is so appealing, adds Marc Spurling, Aon’s Director of Future Mobility Strategy: “The way in which mobility trends are underpinning wider societal changes, reshaping cities, extending mobility access to the underserved, and encompassing the shared and digital economies, while supporting the transition to net zero is super exciting.”
A challenge, however, is in helping new businesses manage their risks when the focus is all about growth. “Insurance and risk should be high on the agenda, but it’s not always that way for start-ups and small businesses who are more focused on growth,” warns Jansse, even though the total cost of their insurance programmes can be very high. “We see digital native companies with an insurance spend that can be as much as 60-80% of their total expenses; meaning it has a high impact on them and their business model in terms of funding, and is an obstacle as they look to grow and expand into new territories,” says Spurling.
Working closely with insurers
In addition, new business models come with risks that the traditional insurance market might not have considered. “Many traditional insurance players struggle with some of the innovative areas that are a feature of the mobility sector,” says Spurling, “because there isn’t the historical data to enable them to underwrite these risks in the way they normally would. It’s a big challenge when it comes to setting premium levels and can lead to reduced insurer appetite for some of these risks, which in turn leads to higher prices. In the EV space, for example, the cost of insurance is higher which creates a problem for customers. We’re looking at how we can work with insurers and particularly those innovative new markets that are willing to look at newer and more complex data sets and provide capacity on the back of it. Data is at the heart of the strategy and many of the technology platforms have more data available than we’ve ever had historically.”
Helping retain talent, unlock finance and reassure regulators
It’s not just with insurance though, where Aon can help, says Martyn Denney – Aon’s Head of Innovation and Investments. “In the war for talent, advice on how to attract and retain the best talent, whether it’s around executive compensation or health and benefits is critical if a mobility company is to succeed and drive growth in a hyper competitive market. Mergers and acquisition advice is also important not just in helping to plot a path to an IPO, but often it’s more about how we can help these companies raise finance and de-risk themselves in the eyes of potential investors. One area of rapid growth, for example, is in helping businesses to value and leverage their intellectual property – particularly important in the absence of physical assets – to raise debt finance as an alternative to turning to private equity.”
Another risk area is around regulation, adds Spurling: “We’re actively tracking the regulatory trends throughout Europe when it comes to mobility issues like the use of autonomous vehicles or micro-scooters. In many ways it is about how we can work with mobility businesses to both understand those regulatory issues but also provide assurance to the regulators such as through an insurance solution.”
Immersed in new technology
Over the next months, Aon and MOVE will be exploring some of these risk challenges and solutions in more detail but, in the meantime, the countdown to MOVE 2023 continues. “We’re excited to immerse ourselves in the new technologies and innovation that will be on show at MOVE 2023 and to work with mobility businesses to secure their future wherever they are on their growth journey,” concludes Denney.
The information contained in this document is intended to assist readers and is for general guidance only
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