Demand for insurance is expected to soar as the sharing economy becomes more popular with consumers.

But a joint research paper from Lloyd’s and Deloitte says traditional insurers must raise their game or play second fiddle to insurtechs, which are inventing products especially for the segment.

“Sharing economy platforms have transformed entire industries because they’ve rejected the status quo and challenged the way we think about once traditional goods and services,” Lloyd’s Head of Innovation Trevor Maynard said.

“To effectively serve the sharing economy, we as insurers must follow that example and rethink traditional insurance products.”

The research focused on six markets – the UK, US, China, Germany, France and the UAE – and found sharing is widespread and will accelerate.

More than one-quarter of consumers have either bought services or rented possession from their peers via shared platforms in the past three years.

About 57% of adults who sold services or lent products were insured by transaction-embedded or personally owned cover, but there remains a shortfall in bespoke cover for the specific risks of transacting.

“As a result, those who share assets and possessions or sell services can face significant insurance gaps,” the research paper says. “The opportunity for sharing economy platforms and the insurance industry to work together is clear.

“By partnering to reduce risk and facilitate growth, the sharing experience will continue to improve for customers engaging on shared platforms.”