With 2.8 million individuals currently working within the UK’s gig economy, there are major benefits to be gained for insurers who are quick to tap into this rapidly expanding market, according to data and analytics firm GlobalData.
A recent report by the company found that the market is only currently being served by a number of small InsurTech firms, leaving considerable opportunities available for any large insurer looking to expand into this space.
Additionally, there is a large number of individuals operating within the gig economy who hold no insurance, and who could benefit from cover against accidents whilst working, loss of income due to illness or public liability.
Individuals in the gig economy contract their services out to be paid per task, and may also offer insurers an opportunity for employment purposes.
Originally a consumer-to-consumer market, rapid improvements in technology have enabled the gig economy to grow into an entirely new market in recent years.
Daniel Pearce, Financial Analyst at GlobalData, explained: “This new working practice can benefit the insurance industry in a number of ways. Outsourcing tasks to those working in the gig economy will help reduce cost and potentially increase efficiency, but the most exciting prospect is the development of a new market which demands new insurance products.”
“Traditional commercial insurance products are just not suitable; they offer no flexibility and result in gig economy workers paying for insurance for periods they are not working,” said Pearce.
“Insurtechs have responded to this by leveraging greater technological capabilities to develop insurance products for workers across different sectors which are able to be switched on and off, only providing cover for the necessary time frame and mirroring the flexible working hours of those in the gig economy. This has resulted in insurtechs being the main presence within the gig economy insurance space.”
GlobalData suggested that partnerships would be insurers’ easiest route to the market, but warned that the potential for imminent changes to regulation may add risk to such an undertaking, with demand for some insurance products contingent on certain workers’ rights.
Pearce added: “The biggest risk which could impact the UK gig economy is the growth of the global gig economy. The international growth of the gig economy will drive down the average pay per task as work is outsourced to offshore workers. This will undoubtedly reduce the size of the UK workforce in certain sectors potentially shrinking the size of the insurance market.
“The gig economy will continue to grow in popularity with workers who seek increasingly flexible employment and insurers would be naive not to establish themselves within this market.”
