Insurance fears impact on British ride-sharing growth

Co-founder of French long-distance ride-sharing firm BlaBlaCar, Nicolas Brusson, lamented in a recent interview that Britons have not embraced long distance ride-sharing, a concept which has grown enormously popular in Europe. Despite often working out significantly cheaper than train or coach journeys, Brusson believes Britons are too concerned about insurance issues to share their journeys with paying passengers, or to enter another vehicle as a passenger. Many seem unaware that there are no extra insurance or taxation liabilities if the charges only cover the journey costs, rather than securing a profit for the driver. Brusson refutes another theory, which is that British people simply prefer to travel alone.

When he was a student in Toulouse, François Delattre found his regular train trip to Paris frustratingly slow, so he turned to paying drivers to “rent” a seat in their vehicle for the journey via internet forums. Ten years later he regularly takes passengers in his own car when travelling from his home in east London to France, a journey he makes every few months, charging for their seats and offsetting his costs.

While this concept of ridesharing is enormously popular in continental Europe – most of his passengers are French – one of the largest growing areas of the sharing economy has failed to grab hold of the British public consciousness in the same way as renting out rooms via Airbnb.

“When I mentioned [ridesharing] in the office [in London] people were quite surprised. It is not very popular here. If they need a cheap transportation, people will take the long-distance bus,” he said.

The biggest player in ridesharing is Paris-based BlaBlaCar, which allows drivers and passengers to key in the details of where they are going and be linked with others doing the same journey. With 30 million users, the multinational company was last year valued at £1.1bn. Nicolas Brusson, one of the three founders of the company, said the UK takes up a small proportion of its users and has not become as mainstream an option for transport as it has on the continent.

“It works [in the UK]. You can see trips, you can go from Paris to Manchester. If you go on the website and check Paris to Lille or Berlin to Hamburg, you see the volume of offer is between five and 20 times higher,” he said.

“And the perception is the same. If you go into a bar in Spain and ask people have you heard of BlaBlaCar, the likelihood is yes. If you go to a bar in the UK and you ask if people have used BlaBlaCar, the likelihood is probably no … so it is still kind of niche in the UK.”

When I mentioned ridesharing in London, people were surprised. They take the long-distance bus BlaBlaCar user François Delattre

The system works by giving drivers a window of prices which they can charge for a journey, with a ceiling so that a driver cannot profit from the trip. The passenger pays a fee to the company for the service, which ranges between 10% and 15% depending on the country.

For the consumer, this appears to work best with spontaneous trips or at short notice. A trip between London and Manchester this weekend – leaving Friday and returning Sunday – would cost approximately £20 each way on BlaBlaCar. A train would cost twice the price, although the bus would come in slightly cheaper at £32. Try for the same journey at the end of July and there are no options for a rideshare, while the train costs £57 and the bus £14.

Similarly, travelling internationally at short notice can also be good for the pocket. A journey each way to Paris from London this weekend costs between £24 and £52 on BlaBlaCar. A return journey on the Eurostar costs £245, the bus £63, and £118 on budget airlines. Again the advance option for the end of July does not throw up any options on rideshare while the train cost about £100, the bus £39 and flights £78.

Under BlaBlaCar charging, the number of seats drivers can offer and the fees they can charge are limited so that a profit cannot be made by the driver. All motor insurers within the Association of British Insurers have agreed that cover will not be affected as long as the fees contribute towards the running costs and no profit is made.

So why have the British not embraced the idea of sharing their car in the same way that they share their homes via Airbnb? Part of the problem, according to Brusson, is insurance.

Although insurance systems are similar across Europe, he said, there is a perception among some British drivers that they will not be covered if they take passengers. “In continental Europe it has always been a non-issue. People understand that as they are sharing a cost with other passengers, they are insured, and we offer additional insurance through a partnership with Axa,” he said.

“There is a fear in the UK that as I get someone stepping into my car, and transacting money, then you are at a bigger risk. The perception of legal risk … and the [fear] of being sued in the UK is much, much stronger.

“The thing that has been making the UK not as mainstream as other countries is the ability to convince drivers to actually offer their seats between cities, and the only rational thing that we found to be radically different between continental Europe and the UK was this notion of car insurance.”

In the same way that avoiding profit avoids insurance implications, the same applies to tax. A HMRC spokesman said that if the charges are just to cover costs, there would be no taxable trading activity: “When an activity is undertaken such as car-sharing it will depend on the individual facts, but if it goes beyond cost sharing resulting in a profit, it may constitute a taxable activity.”

For ridesharing in particular you are not making a profit through those journeys, it is about sharing the costs. Rob Vaughan, PricewaterhouseCoopers

Rob Vaughan, an economist with PricewaterhouseCoopers who has produced a report on the sharing economy, said studies have shown that some in continental Europe have more altruistic objectives when using the sharing economy, while British people can be more focused on financial gain.

“The culture of sharing and collaboration can be very different across different countries … In continental Europe, I think the motivation for people using the sharing economy and ridesharing tends to be not just financial in nature. There are broader, more community objectives which [are] built on the way local communities have tended to be more open and neighbourly and fair with each other,” he said.

“For ridesharing in particular you are not making a profit through those journeys, it is about sharing the costs. So financial rewards are lower than other types of activity in the sharing economy.”

But maybe it is just because British people prefer to travel alone? Brusson does not believe this is true, as flat and home sharing has proved successful.

For Delattre, ridesharing has spread through the family and his 70-year-old mother uses it, while he has taken some unique passengers. “I’m a kind of car sharer pet expert. Because it is very difficult to bring animals to the UK other than by car, people ask me if they can bring them,” he said. “So I regularly take cats, dogs and even ferrets and rats; weirdly, the latter don’t need to go through the vet border controls. But the smell can be terrible, so I’ve decided to limit it to dogs and cats,” he said.

Lille and back for two at under £62

Finding a reasonably priced last-minute weekend away for the spring bank holiday was always going to be an uphill struggle, writes Shane Hickey. First attempts threw up limited availability for self-catering in the UK, but seemingly unlimited prices – ranging from £300 for the long weekend for two people. Coupled with car hire of £120 (before petrol costs) we gave up and the search continued. Going to Paris via Eurostar presented no better hope. With tickets starting at £120 a head, each way, investigations were abandoned before we even checked the price of Parisian hotels.

Instead, myself and my wife opted for the sharing economy alternative - a rideshare via BlaBlaCar and an Airbnb in Lille, described by Lonely Planet as “France’s most underrated major city”, but, more importantly, somewhere we could get to at last minute. While we are Airbnb veterans, it was our first experience of ride sharing.

Collected in a Peugeot 205 at 2pm on the Saturday, we were joined in the car by a Hungarian IT worker on his way to Bruges. Along with our French driver, it was a tight but comfortable fit. Before the trip we knew something of the driver, who has reached “ambassador” seniority level on BlaBlaCar’s rating system, and the four of us chatted pleasantly on and off throughout the journey.

The only problems arose during delays on entering the Eurotunnel, where we queued with many others to get on to a train - not a situation which could be blamed on the driver - and after leaving the train at Coquelles and driving another 120km, we arrived at our destination.

When we were dropped off, with our one bag between us, outside the main train station in Lille, it was just after 7.30pm local time. At almost six-hours, the journey may have been longer than a flight to Paris, but look at the price using ridesharing: at £30.15 each going out and £31.78 coming back, it was a valuable budget option for a last-minute bank holiday weekend away.