Will insurers be able to survive the shift to the gig economy, and the challenges it has brought? Find out about some of the differences they are facing here.

The introduction and rise of the gig economy has meant that many industries have had to adapt to be able to keep up with demand. This has resulted in other areas needing to shift to be able to meet these changes. One such sector is insurance. They have had to introduce specialist policies to cover some of the shifts that the gig economy has introduced, especially in regard to car insurance and rideshare. Can insurers survive these changes? Let’s take a look.

What is the Gig Economy?

The gig economy arose due to many people turning to freelance or on-demand roles. With people juggling many different hats in their life, being able to pick and choose when you work is considered to be a luxury that many want to take advantage of. There are many factors as to why someone might consider taking on a job nowadays, but flexibility in working hours can often be one of the main driving forces.

This also allows people to pursue their passions. Those who might be trying to break into an industry where entry-level positions offer low salaries or are even unpaid might prefer to work in the gig economy so that they have an income that flexes around their passions. For example, if you are a musician and you land a performance slot at an important and prestigious venue, you might have to fight for a night off if you work a traditional job such as in a bar. If you work in the gig economy, however, you set your own hours and can therefore shift your hours of work so you don’t lose your income, and can still accept the performance.

Why Has This Changed Insurance?

This has changed the face of insurance in a way that we did not necessarily expect, but nevertheless makes sense. Freelancers do not need the same sort of insurance as someone who is employed by a corporation. They are simply not going to take out the policies, and so this has meant that insurers have had to adapt their policies to ensure that people do buy their insurance.

For example, the rideshare industry has boomed thanks to companies like Uber and Lyft. To work in this industry, you must have car insurance. What many in this particular gig economy don’t realise is that you also need rideshare insurance. They see that rideshare insurance is an optional coverage and think that they can do without it.

However, if they were to get into a crash while on the clock for one of these rideshare companies, they could be in serious trouble. Their personal car insurance might not be enough to cover the cost of the car repairs, if the insurer even decides to pay out in those circumstances. Rideshare insurance has been brought in as a policy to cover the grey area created by this gig economy. All drivers are responsible for their passengers, but this understandably needs to change when the passenger is paying for the ride.

What Needs to Be Improved if Insurers Want to Keep Up?

In order to keep up with the demands of a changing industry, insurers are going to have to make some changes to their own infrastructure. Merely offering the right policies is not enough. Insurers need to make sure that they offer a good service and product to younger generations – the ones most likely to be in the gig economy – if they wish to see engagement and a sale of their product.

A key difference can be seen in how the younger generation wishes to purchase things. Before, someone might have been more inclined to speak to an insurance broker or some other expert to ensure that they were getting a good deal. This has now changed. Younger people would rather find the right policy using an app. They are used to a great deal of their lives being handled automatically by their apps and other software – whether they are doing their banking or any other part of daily adult life management. Insurers need to make sure that their policies can be bought online or via apps, or they will occupy a massive part of the market.

Insurers also need to make sure that they are providing flexible coverage for these gig workers. They might not want coverage 24/7, but would rather have something that they can essentially switch on and off as they choose. No two gig workers walk the same path, and as a result, insurers need to come up with products that can be tailored to individuals rather than adapting one-size-fits-all policies, as they have done in the past.

Time for Change

The gig economy is only going to grow, and insurers need to make sure that they are able to keep up with this change. Refusing to acknowledge the needs and preferences of these workers means that they are not going to offer the right products. The gig economy simply won’t take out these insurance products, and insurers will be left behind. To remain relevant and able to offer the right coverage, an insurance company needs to focus on what it is able to offer the individual gig worker, not the masses.