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Growing Up Gig

How a growing number of Gig Workers impacts the insurance industry.

The world of work looks very different than it did 50 years ago.

Gig workers, freelancers, and contract employees fill the labor pool, and at an increasing rate since the pandemic emerged in the US in March 2020. Post-pandemic, gig work continues to become a more and more attractive option for US consumers, especially younger consumers who have felt the string of economic instability.

In fact, in 2019 there were an estimated number of 41 million gig workers; and industry experts point to a 25% increase in the number of gig workers since the start of the pandemic. Today nearly 36% of US workers consider themselves freelance or independent workers – and this rate is expected to reach 50% by 2027. This level of growth signals a larger trend that is not just a blip - it is here to stay.

The implications of a growing gig workforce are vast, expending beyond how they work to how they live, spend money, and plan for the future. Insurance – both medical coverage and property + casualty coverage – is one area that is highly impacted by gig employment.

Group benefits and traditional plans simply don't fit.

A growing number of gig workers means that traditional group benefits will not be available (or feasible) to cover their needs and mitigate future risks. As such, a growing number of new insurance providers are entering the market with coverage options that are specifically tailored to the needs of gig workers. Not only do they offer insurance outside of a group plan, but they most often adhere to a mobile-first strategy, understanding that gig workers may not operate in a traditional 9-5 world.

  • Lemonade hit the industry in 2015 and has progressively made a name for itself by offering coverage that is on par with the ‘big names’ offered through an easy to access app-based portal. Lemonade also sets itself apart in the industry with a focus on transparency and clear terms which is a must for gig workers that are reviewing their options on their own. Currently lemonade offers renters + homeowners’ insurance, term life and pet insurance with auto coverage on the horizon.

  • Bestow touts affordable, online term life insurance that does not require an exam. The online platform promises a quote delivered in seconds with plans starting at just $10 a month – showcasing options that gig workers are looking for. Then there is an option to pay for a personalized policy.

  • Root Insurance providers car insurance to drivers in 30 US states. What differentiates Root is that there is no paperwork, all that is required is an app download and then the app monitors the driving behavior in the background.

A common theme across all freelance insurance options is featuring a user interface that is easy to use with messaging and plans that exude authenticity – plans are clear, and terms are concise.

There is still room for traditional players.

However, there is still a place for traditional insurers to play and cater to the needs of a growing gig workforce. Partnerships with start-ups and other Insurtech partners offers an expansion to the business and the availability to offer plans built on industry expertise, while being backed by cutting edge technology.

For example, American Family Insurance (AMFam) organizes its interests around innovation, advanced analytics, and connectivity. AMFam has been busy investing in several partners including CoverHound, Home Tap, and Bunker. These partnerships offer not only an additional stream of revenue but also expansion opportunities and leveraging new innovative ways of doing business.

Traditional players can also establish separate divisions that are backed by the company to support their more ‘non-traditional’ customer base. There are several teams that are active in building the future of insurance today including Anthem Innovation Studio, MetLife LumenLab, and AXA Lab.

The inconsistency of gig work is an important consideration in plan design. Gig work can be inconsistent at times and projects often arise on short notice, so working with a digital insurance provider allows for quick and flexible coverage. Leaders in coverage to the gig economy addresses the needs of this new work and features easy to access plans, clear terms, and flexible payment options.

Evolution = Opportunity

The evolution of how people work does not need to dampen insurance opportunities, rather it opens the door to new opportunities and changes to brand positioning. Opportunities abound in the insurance industry to design innovative offers that speaks to a changing labor force and sets the provider apart.

Key consideration in Capturing the Gig Economy with Insurance Offers:

  • Assess the Unique Needs of Gig Workers: In building products, positioning and approaches it is imperative to truly understand how gig workers live today. This extends beyond how they work and encompasses how they live, where they go, how they spend money and the whole view of their lives. For gig workers this is key as the lines between work and life is blurred and will have a greater impact on insurance offers that they need.

  • Make it Clear, and Transparent or Risk Losing Relevance: This growth in gig work also puts pressure on insurers to ensure that product positioning is clear, concise, and consumer friendly. This has always been a challenge for the insurance industry but is an even more pressing issue when trying to appeal to gig workers that are pressed for time, money, and attention.

  • Brokers have an Opportunity to Build Consultation: For insurance brokers working with traditional insurance carriers there is an opportunity to carve a niche with gig workers and freelance workers. Insurance is complicated; brokers can help bridge the gap and offer further consultation beyond a DIY model of Insurtech leaders.

What does the future hold?

There is a confluence of macro trends that are set to have a major impact on the industry. Technology is evolving, and the world of work is changing. Increasingly employees feel empowered to pave their own paths and this has impacts to the world around them. Simplicity speaks and can set the leaders apart from the laggards in an ever-evolving insurance landscape.

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