Tapoly CEO Explains What Insurers Should Know When It Comes to the Gig Economy

Aug 9, 2023 / by Janthana Kaenprakhamroy

For the third part of our blog series featuring Tapoly, the digital provider of flexible insurance products and insurance technology solutions, CEO Janthana Kaenprakhamroy offers insight to insurers on the gig economy market. Kaenprakhamroy breaks down the gig economy, how it affects insurers, and solutions for small businesses to navigate this market system.

What is Gig Economy?

The gig economy refers to a modern labor market characterized by the prevalence of short-term, flexible, and temporary work arrangements, often facilitated by digital platforms and technology. In this type of economy, individuals, often referred to as "gig workers" or "independent contractors" engage in a series of short-term jobs or projects, rather than working for a single employer on a long-term basis.

The rise of the micro economy has been influenced by factors such as technological advancements, shifting workforce preferences, and changes in employer-employee dynamics. While it offers benefits like flexibility and the potential to earn income from multiple sources, concerns have been raised about worker rights, job security, and the lack of traditional employment benefits for gig workers.

How the Gig Economy Affects Insurance Transactions

The gig economy can have significant implications for insurance transactions, both for gig workers and the insurance industry itself:

Coverage Challenges: The gig economy introduces unique coverage challenges for insurance transactions. Traditional insurance policies may not fully protect gig workers while they are performing gig-related activities. For instance, personal auto insurance might not cover accidents that occur while a driver is using their car for ridesharing services. This has led to the development of specialized insurance products tailored to gig workers' specific needs, such as rideshare driver insurance or short-term liability coverage.

Liability Complexity: Determining liability in the gig economy can be complex. When gig workers are involved in accidents or incidents while on the job, it may be difficult to allocate responsibility among the worker, the platform they operate on, and other involved parties. Insurers must navigate these intricate scenarios to appropriately address liability and provide suitable coverage.

Demand for Innovative Products: The rise of the gig economy has driven demand for innovative insurance products. As gig workers often have irregular work patterns and may need insurance coverage only during active working hours, there's a need for on-demand and flexible policies that can adapt to their fluctuating needs. Additionally, gig workers' lack of access to traditional employee benefits like health and disability insurance has led to a demand for more portable and affordable coverage options catered to their circumstances.

Challenges Facing Insurers as They Navigate This Emerging Trend

Smaller insurers especially often lack access to comprehensive data on gig workers and their activities. Insurers rely on data to assess risk accurately and price policies accordingly. Without access to large datasets and advanced analytical tools, smaller insurers may struggle to develop customized insurance products and competitive pricing for gig workers.

The gig economy presents diverse and evolving risks, requiring insurers to offer specialized coverage options. Smaller insurers may find it challenging to invest in research and development to create tailor-made policies that meet the unique needs of gig workers. This can lead to limited product offerings and potentially missing out on market opportunities.

Insurance regulations may not adequately address the gig economy's complexities, leaving insurers unsure about compliance requirements. Smaller insurers might lack the legal expertise and resources to navigate evolving regulations effectively. Adapting to changing compliance standards can be time-consuming and costly for smaller companies, impacting their ability to keep up with larger competitors.

Advice to Insurers Executing Strategies in the Gig Economy

To overcome these challenges, smaller insurers need to focus on niche specialization, partnerships with gig platforms, leveraging technology for data analysis, and staying updated on regulatory changes. Collaborating with insurtech companies can also help them access innovative solutions and stay competitive in this rapidly evolving landscape.

Develop specialized insurance products that cater to gig workers' unique risks and needs. Address coverage gaps that traditional policies might not cover during gig-related activities. Offer flexible, on-demand coverage options that align with gig workers' fluctuating work schedules.

Leverage data analytics and advanced technology to assess risk accurately and efficiently. Collaborate with gig platforms and insurtech companies to access relevant data and streamline insurance distribution. Utilize technology for policy administration and customer service to enhance the overall user experience.

Educate gig workers about the importance of insurance and how it protects them during their gig engagements. Offer transparent and clear communication about coverage terms, pricing, and claims procedures. Building trust through customer education is crucial for establishing long-term relationships in the gig economy market.

To view part one of our Tapoly blog series, click here. To view part two, click here.

Tags: Insights, Issues & Trends, New/Emerging Risks, AAIS Insights, Economy, Tapoly, Gig Economy

Janthana Kaenprakhamroy

Written by Janthana Kaenprakhamroy

Janthana Kaenprakhamroy is the CEO of Tapoly, winner of Insurance Provider of the Year at the British Small Business Awards 2018 and winner of Technological Development by the European Business Awards 2021. Tapoly is an award-winning digital managing general agent (MGA) for SMEs and freelancers, and provides underwriting services, distribution, and an end to end white labelled SAAS (software as a service) solution connecting insurers with their distribution partners. Janthana was listed by Forbes as number 6 of the Top 100 Women Founders to watch and is among the Top Ten Insurtech Female Influencers according to The Insurance Institute. Janthana is a chartered accountant and former internal audit director at top-tier investment banks.

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