Gig economy brings both benefits and challenges for insurers
The number of gig economy workers is rising steadily year-on-year, leading to potential benefits and challenges for the insurance industry, says a report by Edelman Berland. The increase in on-demand workers gives insurers flexibility in their employees, offering skilled workers when work is available, rather than wasting operational costs on full-time workers for ad-hoc work. Claim adjusters, underwriting staff, and marketing executives can be hired on a per-project basis, reducing staff expenditure. Insurers can also offer insurance products for on-demand workers, though the challenge will be to offer liability, health and life insurance tailored to freelance workers’ needs.
The percent of the U.S. workforce considered on-demand or freelancer is 34%;

The number of on-demand workers increased by 700,000 from 2014-15;

The majority of workers who switched from traditional employment to on-demand employment earned more money within their first-year freelancing;

More than 51% of on-demand workers find project work online, up from 42% from the prior year; and

More than half of on-demand workers report they prefer freelance work and would not consider traditional employment regardless of the compensation.

Independent Contractors: This category consists of “traditional” freelancers who typically do freelance, temporary or supplemental work on a per-project basis, rather than traditional employment. Moonlighters: These are professionals who have a primary job but also moonlight from time to time to earn extra income. For example, a copywriter who works full time for a traditional firm, but also works on projects for others in the evening. Temporary Workers: Although temporary workers are considered employees by their staffing agency, they work on a temporary basis and have the liberty of choosing the type and scope of work being offered. Freelance Business Owners: This is typically a freelance business that contracts with other freelancers who are paid by the freelance business rather than the client. For example, a freelance web designer who has more business than he or she can handle contracts with other freelancers who are paid by the freelance business rather than the client. Diversified Workers: This category consists of workers who have multiple sources of income from a mix of employers and freelance work. (For example: a part-time employee at a hospital who supplements her income as an on-demand worker at WeGoLook.)

According to a report published by Edelman Berland , an independent research firm that conducted a study on behalf of the Freelancers Union and Upwork, the number of on-demand workers (who earn a living by performing tasks on an ad hoc basis) continues to grow year after year. Some of the most interesting findings in the report are:So we have a growing army of happy freelancers who have sworn off traditional employment. If that's not disruption, I'm not quite sure what is.According to the key findings reported in the Edelman Berland survey, the outlook for freelancing is continued growth because of the satisfaction perceived by the members of the on-demand workforce. In fact, more than 80% of freelancers believe there are better days ahead, and three in four would recommend freelancing to their family and friends. It’s even more interesting to learn that three in four traditional employees are open to doing additional work as a freelancer if the opportunity is available to them. And opportunities to "gig" are growing exponentially with the advent of innovative platforms. Consider that in 2012, WeGoLook had 7,400 gig workers on our platform. As of January 2016, we now have considerably more than 30,000 Although common terms like “1099 worker” or “freelancer” are used when describing the on-demand worker, the category consists of five distinct classifications:The consequences for insurers are twofold. No. 1 is that the insurers can access this workforce to scale back on the insurer’s cost of employment. And, No. 2, this workforce will need various insurance products just like any other small business. Let's dig a little deeper with several key points here. Communications There are several important communications tasks that need not be assigned to full-time workers who possess communication skills. These tasks are performed based on temporary projects and to reach specific outcomes. Using a skilled on-demand worker who can be available at a moment’s notice and for a short period makes more financial sense than using a higher-paid full-time employee who has fewer incentives to please consumers or agents that they communicate with. Large insurers with a national agent distribution network can also use skilled freelancers to communicate with the many agencies across the country that represent them. Claims Because an insurer’s claims department is not a profit-generating department, strategies to reduce operations cost are legitimate. Although most insurers employ a staff of claim managers, many assign the adjusting portion of the claim to independent contractors. Now, insurers can find experienced claim adjusters to work on a per-project basis and reduce their staffing accordingly. This will be especially useful when the claimant is in a rural area and miles from the nearest claim facility or office. Why employ a disparate network of full-time field agents when you can tap into an on-demand workforce at a moment's notice? Marketing All insurers — large or small — will have some amount of dedicated marketing staff members to communicate their message to prospects and clients. By accessing the on-demand workforce on an as-needed basis, insurers can reduce their workforce and cut employee expenses for ad-hoc and last minute projects. Because of the size of the gig workforce, competition will not only drive costs down but will give you access to the most talented professionals who fit your hiring criteria. Underwriting As the demand for insurance products ebbs and flows during the year (and during natural disasters), having a flexible underwriting staff can benefit an insurer’s relationship with agents and customers. This flexibility can be accomplished by contracting with skilled freelancers who have come out of the insurance industry and prefer to work as a freelancer rather than as a traditional employee. Having skilled underwriters on the payroll drives up the administrative costs of insurance products and can be greatly reduced by accessing the on-demand marketplace whenever possible. New Business Fortunately for insurers, on-demand workers need to purchase insurance just like any typical small business. Although they work from home and typically do not require workers’ compensation insurance, workers will need to protect their business and themselves with professional liability, health insurance and life insurance. In fact, insurers who are willing to offer a business owners policy to home-based businesses can expect an increase in sales that is directly related to the significant growth of the on-demand economy.Insurers who understand the continual growth of the on-demand workforce and embrace the implications for adapting this segment into their traditional workforce are likely to find significant savings in payroll and employee insurance costs. On-demand employees are typically experienced workers who are doing what they know best and are passionate about. But they are happier because they are working for themselves and are masters of their own destiny. Insurers and agencies that wish to reduce the costs of distribution, marketing, communications and claims should look to this flexible workforce to streamline processes that affect consumer satisfaction. Based on personal experience, I can attest that integrating the gig economy into your supply chain and business processes is a win-win.