While half the U.S. population gets health insurance through an employer, more than one-third of the labor force works in the gig economy full or part-time. A trend that exploded during the pandemic, gig work is here to stay.
For gig workers and freelancers, independent work offers flexibility and earning power but leaves these workers without the comprehensive employee benefits expected in traditional employment.
Of course, these individuals can arrange their own individual coverage, but many don’t, and this demographic is showing signs of being underinsured across multiple lines of business.
Embedded insurance provides an opportunity for employee benefits insurers to capture this market. With embedded insurance, carriers can bundle products, enable direct mobile sales channel distribution and offer relevant, affordable and flexible coverage to this underserved market.
An Upwork study finds that 60% of people who had recently taken up freelancing or gig work say that a salary increase would not convince them to return to a traditional job.
Embedded insurance is becoming common in P&C lines. For example, in 2020, Nationwide Insurance partnered with Toyota to offer embedded usage-based insurance (UBI) exclusively to Toyota drivers using telematics technology.
The rise of embedded insurance is linked to technological advances from digital ecosystems and application programming interfaces (APIs) that tie them together. Today, carriers can provide seamless connections to digital platforms for any business through cost-effective microservices.
This technology trend is supporting massive gains in insurance customer self-service and greatly simplifies the customer journey (you’re buying two products at once). As a result, insurance distribution strategies are being designed to offer insurance in as many contexts as possible, as simply as possible.
Embedded Insurance Within Online Gig Platforms
Gig workers are often tech-savvy and independent people who schedule their daily lives and jobs through online marketplaces and mobile task-based platforms. In fact, one study finds that over 70% of freelancers find their next gig through online platforms.
Partnering with online markets and task-based platform companies presents a sizeable opportunity for group benefits insurers to provide coverage to large groups of freelance users at scale.
For instance, Stride Health, a web-based insurance recommendation platform for independent workers, launched a partnership with Fiverr, an online marketplace for freelancers. The partnership enabled Stride Health to capture new markets while providing Fiverr's users with personalized recommendations for healthcare plans.
Embedding insurance into digital task-based platforms and online markets can help benefits insurers acquire customers at the point of sale rather than spending money on expensive marketing campaigns for individual freelancers.
In addition, when effectively embedded in digital platforms, insurance products can offer a strategic competitive advantage to insurers and their partners. It can create trust and loyalty among online markets' user base by providing more benefits to users, which keeps them returning to their platform.
Optimizing Coverage to Fit Gig Workers' Needs
To capture new gig worker market segments, carriers must adapt their coverage options and distribution strategies to appeal to the needs of gig workers.
For example, Goose, a Canadian insurtech, is working with AIG Insurance to help offer affordable income protection insurance and hospital cash policies for self-employed and gig workers.
Enabled by open APIs and Goose's self-service distribution app, small business owners, gig workers and freelancers can purchase protection independently on their mobile devices in minutes.
Many gig workers want products that protect them for shorter periods, such as day-to-day, month-to-month, hour-to-hour or contract-to-contract. Therefore, creating more flexibility in coverage options and how gig workers use insurance products could hugely affect how this generation views the benefits of insurance policies.
Employee benefits insurers must make buying insurance coverage as seamless and effortless as it is for them to schedule another gig. As a result, more employee benefits carriers offer portable benefits for gig workers that provide swift and straightforward application and enrollment processes.
Bunker, an online instant business insurance platform for independent contractors and businesses, allows workers to purchase insurance for just the term of their work contracts, enabling more flexible and meaningful coverage for gig workers. The company offers products such as occupational accident insurance, which covers on-the-job accidents that might not be covered by traditional policies.
Cover Genius, another insurtech, has embedded policies within several gig worker platforms and marketplaces, integrating insurance in the sign-up process and providing the ability to turn coverage on and off.
Additionally, small businesses and companies that rely on contractors because they cannot afford full-time employees can use embedded, usage-based insurance to secure a more reliable talent pool and increase contractor retention.
See also: Embedded Insurance Is Everywhere
Embedded Insurance Can Help Capture the Gig Work Economy
Gig workers, side hustlers and freelancers are increasingly fueling the broader economy. Employee benefits insurers have a major role to play in building a safety net for these workers, and we are only just getting started.
Embedded insurance will continue to be an effective form of digital distribution, as the embedded insurance market is projected to reach $3 trillion by 2023. According to Denise Garth, chief strategy officer at Majesco, 40% of insurance will be embedded in the next 10 to 20 years.
Insurance companies can remain highly competitive over the next decade by leveraging APIs, partnerships with insurtechs and online gig platforms and designing seamlessly embedded digital insurance journeys for customers.