The gig economy — which is made up of freelancers, such as journalists who don’t work for one publication, freelance developers, drivers on platforms like Uber, and consumers who rent out their flats via the likes of Airbnb — is a rapidly growing market globally. In the US alone, the gig economy has grown three times more than the overall US workforce since 2014, per Upwork and Freelancer Union. And, by 2027, the majority of the US workforce will work as freelancers in some capacity.
Because these workers aren't tied to an employer, they're generally responsible for making sure they're appropriately insured. For example, a driver for Uber needs to insure their car, while a host on Airbnb needs to make sure they have proper insurance for any damage that might be incurred by a renter. However, a quarter of gig economy workers in the UK make less than £7.50 ($9.60) an hour, according to YouGov, suggesting these people may not have the necessary funds to pay for traditional insurance policies or unexpected damage.
That's created a lucrative opportunity to provide new types of insurance for this market. A number of insurtech startups — including UK-based Dinghy, which focuses on liability insurance, and US-based Slice, which provides on-demand insurance for a range of areas — have moved in to capitalize on this expanding segment of the labor market. These companies have found new ways to personalize insurance products by incorporating emerging technologies, including AI and chatbots, to target the gig economy. In particular, they provide flexible policies that can be adjusted based on when someone is working.
By personalizing policies for gig economy workers in three key areas — vehicle insurance, home insurance, and equipment and liability insurance — insurtechs have been able to tap a gap that incumbent insurers have left largely unaddressed. Many incumbent insurers still rely on legacy processes and policies, which makes it difficult to provide the flexible and tailored coverage that these workers need. However, by taking note of where and how these tech-savvy startups are addressing this market, they may be able to grab a share of the pie before it's too late.
Incumbents would be wise to partner with already established insurtechs to enter this market. Slice, for [...]