Overview of Ride-sharing, Regulation, Insurance and Science Casualty Actuaries of the New England Spring Meeting Frank Chang, Lead Actuary, Uber Brad Nail, Insurance Policy Manager, Uber March 23, 2015

// CAS ANTITRUST NOTICE The Casualty Actuarial Society is committed to adhering strictly to the letter and spirit of the antitrust laws. Seminars conducted under the auspices of the CAS are designed solely to provide a forum for the expression of various points of view on topics described in the programs or agendas for such meetings. Under no circumstances shall CAS seminars be used as a means for competing companies or firms to reach any understanding – expressed or implied – that restricts competition or in any way impairs the ability of members to exercise independent business judgment regarding matters affecting competition. It is the responsibility of all seminar participants to be aware of antitrust regulations, to prevent any written or verbal discussions that appear to violate these laws, and to adhere in every respect to the CAS antitrust compliance policy.

Overview How Ride-Sharing Works Ride-Sharing Impact On Insurance Market Legislative and Regulatory Developments

How Ride-Sharing Works: Uber // UBER PRODUCT CATEGORIES Limo / Livery Taxi Rideshare / TNC/ P2P Launch: 2010 2011 2013 Partner drivers: Traditional licensed livery / black car operators Traditional taxis Part-time operators using their personal vehicles Insurance Traditional commercial auto for livery Traditional commercial auto for taxi Personal auto + non-owned commercial auto

How Ride-Sharing Works: Uber // DETAILED FLOW - REQUESTING A CAR User sets pickup location User confirms request and method of payment Request is sent to closest available driver

How Ride-Sharing Works: Uber // DETAILED FLOW - DRIVER ARRIVING AND BEGIN TRIP User can track driver progress in real-time User is notified when driver is close to pickup location ETA displayed to user during trip

How Ride-Sharing Works: Uber // DETAILED FLOW - RATING THE TRIP $7.67 Fare is displayed and user is prompted to rate ride experience If rating <= 3 star, user prompted to give reason User receives detailed receipt by email

How Ride-Sharing Works: Uber // SAFETY AND RISK MANAGEMENT Rider Safety Background checks Ratings / Feedback No anonymous hailing Driver profiles in app Insurance standards Vehicle standards Driver Safety Cashless No anonymous pickups

How Ride-Sharing Works // TERMINOLOGY: PERIODS 1, 2, 3 See: http://blog.uber.com/ridesharinginsurance, http://blog.uber.com/certificatesofinsurance NOTE: We maintain $1.5M Liability & UM/UIMBI for trips that originate in certain states.

Ride-Sharing Impact on Insurance Understanding TNC risks Impact on auto insurance market Shifts in consumer driving behaviors New product opportunities

Period 1 Exposure Is Indistinguishable from Personal Auto //UNDERSTANDING TNC RISKS   Personal / Social Available (Period 1) Driver Rated Driver Vehicle Rated Personal Vehicle Personal Vehicle Occupants Driver and sometimes passengers Driver only Technology GPS/Smartphone (Google Maps / Pandora) Smartphone (Uber) Hazards Ordinary driving

Injury Rates In Period 1 Is The Same As Personal Auto //UNDERSTANDING TNC RISKS Unsurprisingly, prevalence of Injury is lower in period 1 and higher while driver is transporting passengers as there are more people in the car Occupants Source: DoT-funded National Household Travel Survey by the Center for Transportation Analysis, OakRidge National Laboratory; Uber experience 1 1.55 2+

There Are No Gaps In Mandatory Coverage //UNDERSTANDING TNC RISKS Personal Auto Policy Livery Exclusion 50/100/25 contingent liability insurance for Period 1 is equal to or greater than personal auto MFR in all states Other state mandatory coverage also provided (e.g., PIP)

Impact On Personal Insurance From Period 1 Exposure Is Tiny //IMPACT ON AUTO INSURANCE MARKET Milliman study (March 2014 - CO) Worst case analysis assumes personal auto policies provide coverage in Period 1 Selected values for driver activity all more conservative than Uber actuals in Colorado Projected impact on personal auto rates was 0.07% or $0.70 / policy Source: Milliman, Inc. study, “Impact of Transportation Networks on Private Passenger Auto Insurance”, March 2014

No Adverse Impact On Personal Insurance From Period 2,3 //IMPACT ON AUTO INSURANCE MARKET Most personal policies exclude coverage while carrying passengers for hire Uber and Lyft’s insurance coverages are primary to any personal auto policy that includes the driver or the vehicle while en route to pickup and while transporting passengers Driver does not need to make a claim to their personal auto carrier for an incident while en route or while transporting passengers

Percentile of Personal Auto Policies High Limits Protect Personal Insurers From UM/UIM Exposure //IMPACT ON AUTO INSURANCE MARKET Liability limits are much higher than personal auto and taxi Reduces UM/UIM exposure on passenger’s personal auto policy Personal Limits: Taxi limits: BI Limit Percentile of Personal Auto Policies 15/30 23% 25/50 35% 50/100 49% 100/300 78% 250/500 93% 500/1000 99% 1000/1000 100% City Required Taxi BI limits Philadelphia 15/30K Boston 20/40K DC 25/50K NYC 100/300K Los Angeles Chicago 350K CSL Rideshare (uberX) $1M+

Ride-Sharing Contributes To The Reduction In DUIs //SHIFTS IN CONSUMER DRIVING BEHAVIORS DUIs are a major driver of Personal Auto Losses Alcohol-impaired motor vehicle crashes cost $37 billion annually Incumbent providers not meeting demand Austin study Sources: NHTSA, Impaired Driving, www.nhtsa.gov/Impaired ; https://blog.uber.com/atxsaferides

Consumers Are Replacing Personal Driving With Ride-Sharing //SHIFTS IN CONSUMER DRIVING BEHAVIORS Convenient access to reliable transportation leading people to get rid of their personal auto or keep cars in the garage Cost of an Uber trip often cheaper than parking The passenger in a rideshare vehicle is one less person driving themselves Non-usage based insurance does not capture or price these reductions in exposure Sources: NY Times “With Uber, Less Reason to Own a Car”, APM Marketplace “Can Uber replace your car?”, Medium.com “A Financial Model Comparing Car Ownership with Uber X”

Ride-Sharing Helps Public Transit, Reduces Accident Exposure //SHIFTS IN CONSUMER DRIVING BEHAVIORS Trips to or from transit stop accounted for 23% and 30% of a typical weekday’s worth of Uber trips in New Jersey and San Diego, respectively.

Ride-Sharing Pools Reduce The Number Of Cars On The Road //SHIFTS IN CONSUMER DRIVING BEHAVIORS

Offering A Ridesharing Product Has Competitive Advantages //NEW PRODUCT OPPORTUNITIES Proactive Innovation in reaction to consumer trends Opportunity for Additional Premium from Existing Policyholders Growth Opportunity and Competitive Differentiator in High Growth Niche

Insurers Have Already Developed Products For Ridesharing //NEW PRODUCT OPPORTUNITIES MetroMile – Usage-Based Personal Insurance for Period 1 Farmers and USAA – Personal Ridesharing Endorsement for Period 1 GEICO, Progressive – Commercial Auto Policy for Period 1, 2, 3 MetLife – Lyft Personal Auto Product, Period 1, 2, 3

Farmers Has A Personal Ridesharing Endorsement In Colorado //NEW PRODUCT OPPORTUNITIES Explicit ride-sharing exclusion added to normal personal policy Separate ride-sharing endorsement provides affirmative coverage for Period 1 Source: http://www.farmers.com/rideshare/

MetroMile Offers Ride-Sharing Product For Period 1 //NEW PRODUCT OPPORTUNITIES Source: https://www.metromile.com/uber

MetroMile’s Per Mile, Pay As You Drive, Insurance Fits Uber //NEW PRODUCT OPPORTUNITIES Class plan determines monthly base rate and per mile charge. Example:

Uber Data Enhances Risk Prediction And Estimation //NEW PRODUCT OPPORTUNITIES Driver Star Ratings Miles and Hours Driven Time, Day, and Location (Start, End, and Traversed ZIP Codes) of Trips Attach weather, speed limit, speed, urban/rural BIG DATA See: http://blog.uber.com/tag/uberdata/

There Are Potential Legislative Obstacles To New Products //NEW PRODUCT OPPORTUNITIES Narrow Definition of Period 1 Products Prevents Innovation Arbitrary Limits Replace Ratable Problem (BI/PD) with very Hard-to- Rate Problem (UM/UIM) Convoluted Language Creates Requirements Which Make Insurance Solutions Nearly Impossible To Construct

Legislative Approaches to Ridesharing Insurance Initial Challenges Commercial use vs. personal use Comparison to taxi/livery model and taxi/livery requirements Allowing part-time transportation activity The livery exclusion Perception of a coverage gap

Legislative Approaches to Ridesharing Insurance Colorado Primary liability of $1M during “prearranged ride” Phase-in approach to Period 1 Contingent liability from adoption to 1/15/15 Primary liability after 1/15/15 carried by TNC or TNC Driver that recognizes TNC activity Must be one of the following: Commercial auto policy (taxi or livery policy) Rider or endorsement to personal auto policy “Corporate liability insurance purchased by TNC” Limitations created by the statutory requirements

Legislative Approaches to Ridesharing Insurance California Delayed implementation (7/1/15) “TNC Insurance” as defined term Periods 2 and 3 $1M primary liability insurance $1M UM/UIM during period 3 Met by TNC Insurance maintained by driver or TNC Period 1 Primary liability at 50/100/30 $200K excess liability maintained by TNC Personal auto policy “shall not provide any coverage…” Limitations created by statutory requirements

Legislative Approaches to Ridesharing Insurance Illinois Period 1 Liability limits of 50/100/25 Contingent liability maintained by TNC Periods 2 and 3 Liability limit of $1M Met by auto liability insurance maintained by the driver, the TNC, or a combination of the two UM limit of $50K in period 3 Authorizes surplus lines coverage Broader ability of insurers to meet these requirements

Legislative Approaches to Ridesharing Insurance Other Issues Comp/collision PIP/Medpay Mirroring TNC driver’s personal auto coverage selections First party coverage Oregon proposal on liability limits Actuarial challenges Disclosures

The Right Legislative Approach Set standards that all TNCs must adhere to Ensure there is no coverage gap during TNC activities Consider only those issues that impact public safety and well-being Respect private contracts and avoid consumer protection issues Allow flexibility for the insurance market to continue to develop Promote innovation in insurance Encourage insurers to develop products to meet the needs of the emerging TNC industry

Q&A