Can Insurance Be Made Affordable?

Although the term “sharing economy” can be elusive, it is leading to a world of reduced costs for both consumers and businesses.

PwC predicts that the sharing economy will grow from a $15 billion-a-year industry in 2014 to more than $300 billion in 2025. Now that's growth! Although the term “sharing economy” can be elusive, the common denominator is an on-demand workforce that leverages underused assets. That on-demand workforce is made up of freelancers, gig workers, temporary staff, moonlighters or whatever label you want to prescribe. This is leading to a world of reduced costs for both consumers and businesses. So, can this translate into more affordable insurance products? Let's explore. The Sharing Economy: A Brief Introduction The key to the shift in consumption behavior from ownership to access (or what we've termed the “sharing economy”) is the use of mobile technology. Smartphones and mobile platforms have enabled major sharing platforms such as Uber, Lyft, Airbnb and WeGoLook. (Yes, we know that early agrarian communities shared everything — including labor and food. But they didn't have smartphones!) The sharing economy also includes services — especially those that can be delivered electronically. See also: The Sharing Economy and Accountability   How Businesses Can Take Advantage Individuals benefit from the sharing economy because of the ability to connect goods and services to consumers electronically or, ultimately, in person. A peer-to-peer model of consumption reduces consumer costs. Adding mobile technology facilitates the sharing and has allowed for cost savings across the board. The sharing economy allows individuals to go into business by using the internet, a laptop, tablet or smartphone. Businesses benefit as much as individuals because they can connect, and contract, with members of the on-demand workforce for ad hoc projects or temporary services. And businesses are noticing. According to a Jobshop survey, one-third of businesses plan to use workers from the sharing economy for their staffing needs over the next five years. But what does that mean for insurance? How the Sharing Economy Can Help Promote Affordable Insurance Look at property and casualty insurance, where rates continue to increase year over year: The sharing economy can have a significant effect on payroll and service-delivery costs. National insurance carriers have massive payrolls that drive up rates for consumers. When payroll costs are compared for W-2 employees and on-demand freelance workers, the savings is significant. When a full-time employee is hired at $20 an hour, the actual cost to the company is much more than the hourly wage because of payroll taxes, benefits, workers' compensation premiums and unemployment insurance. Not to mention the cost of the workspace needed for each employee. The W-2 employee who is hired at $20 an hour actually costs the employer about $25.60 an hour, so an independent contractor hired at $20 an hour reduces the cost of payroll by $5.60 an hour, or more than 20%. Contractors can also be hired as needed, so they aren't paid full-time. Multiplying the payroll reductions by the many thousands of independent contractors working nationally, and huge savings are created that can be passed on to the consumer. By accessing the on-demand workforce, insurance carriers can gain access to highly skilled independent contractors (many of them retirees) at minimal cost. These professionals typically work as independent contractors and offer their skills at below-market prices because they have a retirement plan. I would know. WeGoLook employs more than 30,000 of these highly skilled on-demand workers. Areas for Insurers to Target Insurers seeking to reduce payroll costs can easily access various web platforms, such as WeGoLook, to search for independent contractors to satisfy their needs and save money. These needs can include:
  • Communications: Experienced communicators can be contracted to connect with clients and agents to discuss coming programs or to conduct surveys.
  • Asset Verification: Most property and casualty insurers rely on inspections of residential and commercial properties to make certain the dwelling or building qualifies structurally for a policy. Insurers can use gig platforms to contract skilled field service agents to personally visit and photograph the property in question.
  • Claims: An insurer’s claim department relies on experienced adjusters to inspect and adjust damage to a property or vehicle. In areas with lower populations, using independent contractors makes better financial sense than hiring full-time claims adjusters.
See also: Sharing Economy: The Concept of Trust   Make Insurance Affordable by Passing on Savings to Consumers It’s highly likely that national insurers can reduce payroll costs and service delivery by partnering with on-demand workers in the sharing economy. Technology makes it possible for the parties to connect, discuss and contract for whatever the project might be. The savings can be passed on to consumers, making you more competitive in a crowded market.

Robin Roberson

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Robin Roberson

Robin Roberson is the managing director of North America for Claim Central, a pioneer in claims fulfillment technology with an open two-sided ecosystem. As previous CEO and co-founder of WeGoLook, she grew the business to over 45,000 global independent contractors.


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