Tag Archives: sharing economy

Building Trust in the Sharing Economy

The sharing economy is a system in which individuals may rent their possessions or time to other individuals, often through an app or website. Although the term first appeared in the mid-2000s, New Economy Advisor April Rinne says that it didn’t become a household word until recently. Still, the sharing economy has caused radical change in a very short time.

While real-estate booking apps like Airbnb and ride-hailing apps like Uber dominate our current understanding of the sharing economy, the options for such sharing aren’t limited to houses and cars, Cointelegraph writer Connor Blenkinsop explains. “You can share someone’s garden if you live in a bustling city, strike up job shares, team up with other travelers to share a tour, swap books and even take someone’s dog out for the day.”

Central to discussions of the sharing economy is a sense of disruption, research fellow Chris J. Martin says in a study published by Ecological Economics. This disruption may be framed in positive, negative or neutral terms, but the change itself and its challenges remain a constant topic.

The explosion of the sharing economy has brought a new set of challenges for insurance companies as well. Here, we look at some of the biggest obstacles in the industry — and how property and casualty insurers can meet them.

The Sharing Economy: Challenges for Coverage

Traditional insurance models offer a poor fit for the sharing economy, Wells Media’s Andrew G. Simpson says. “Also new multi-party relationships among platforms, providers and consumers draw further questions around who is ultimately responsible for managing and mitigating risk.”

For example, when an Uber or Lyft driver causes a car accident that injures a passenger, who covers the passenger’s medical costs? Who pays for the damage to the vehicle? What if the other car’s driver had insurance? What if the driver didn’t have insurance?

See also: How Sharing Economy Is Reshaping Insurance

While some sharing economy companies provide coverage for those renting out their homes, vehicles or possessions, such support is usually limited. So when the accident, damage or loss isn’t sufficiently covered by the company, Capgemini Financial Services’ Ian Campos says that substantial risk may fall on the individual.

For example, Airbnb offers coverage of up to $1 million to homeowners who share their properties, WeGoLook CEO Robin Smith points out. But this coverage applies only to the actual scheduled hours of the visitors’ stay — not to shoulder times in which visitors might arrive early or stay late. Also, $1 million may be insufficient coverage for certain homes or losses, such as total destruction by fire.

Finally, the sharing economy is creating challenges to established P&C insurers themselves. Peer to peer (P2P) insurance is a sharing economy phenomenon that allows individuals to skip established P&C companies by pooling their own funds, finance expert at Money Under 30 Sarah Pritzker explains. This model excludes the value-added services an older, more established insurance company can provide — pushing new insurers to communicate that value more effectively to customers.

Rising to the Occasion of a Sharing Economy

It’s tempting to think of the sharing economy as simply a new model of ownership that requires only a slight change to existing insurance products. Some commentators, however, warn that this view misses the fundamental nature of the disruption the sharing economy represents.

“Taken together, the growth of [sharing economy] services suggests that we are entering an era in which consumers will value access over ownership and experiences over assets,” Financial Times reporter Brooke Masters says. Many companies have already made the shift: A focus on intellectual property over tangible real estate or equipment has supported the growth of organizations like Apple and Amazon, for instance.

This fundamental shift in ownership and access is problematic for current models of property and casualty insurance. Some types of insurance may not apply to businesses in the sharing economy, and others may be prohibited altogether. Jose Heftye and Robert Bauer, Marsh managing director and AIG managing director, respectively, explain this struggle in a 2018 report. “Where the distinction between personal and commercial use of assets in the sharing economy is blurred, regulators view personal lines of insurance very differently from commercial.”

By mixing personal and commercial use, sharing economy companies can cause coverage gaps for participants. For instance, an Uber driver’s personal auto insurance may not cover times the driver uses a vehicle to make money through Uber, but the cost of a commercial policy may be out of reach for someone who just wants to make extra pocket money by driving for Uber on the weekends.

Trust is also a significant issue in the sharing economy, both for customers who share their houses or cars and those who use them, Lyle Adriano writes in Insurance Business. For insurance companies, providing flexible products that explain the coverage gaps they address is a key factor in building trust among users.

To foster that trust, participants in the sharing economy are putting pressure on insurance companies to provide adequate coverage or to explain why such coverage is unavailable. From adopting new brokers to creating more out-of-the-box services, researcher and writer Esther Val highlights that the sharing economy is prompting insurance providers to offer more flexible insurance solutions.

They’re also being pushed to do so by insurtech startups, especially those that are already seeking to provide these services, reinsurance treaty analyst Alex La Palme explains.

For instance, Slice Labs is a new insurance provider that provides on-demand policies specifically for home and ride sharing. This helps fill in the gaps for nuanced situations — like damaged furniture or utility issues — that aren’t usually covered, Slice Labs CEO Tim Attia suggests.

To compete with these startups and meet customer demand, established insurance companies need to find new ways to cover risks they have not covered—or perhaps have not even seen in the past. One way is to partner with sharing economy platforms, Deloitte insurance consulting partner Nigel Walsh recommends. Another idea is to scrutinize the ways that the sharing economy has changed people’s behavior, understanding and approach to risk regarding insurance.

Addressing Customer Needs in the Sharing Economy

One of the biggest hurdles to participation in the sharing economy is risk. A study by Lloyd’s of London found that 58% of U.S. and U.K. consumers believe that the risks of sharing their possessions outweigh the benefits.

Even for those who do participate, risk is a concern — particularly the risk of events and situations that can’t be anticipated. P&C insurers can help enable participation and growth by clarifying their role in coverage in the sharing economy, Lloyd’s Chief Commercial Officer Vincent Vandendael offers. “Based on our findings, instilling consumers with confidence by clearly defining and protecting against risk can help remove barriers to engagement in the sharing economy.”

See also: How Sharing Economy Can Fuel Growth  

Ryan Ward, an actuarial analyst at American Modern, agrees, noting that educating insureds about coverage gaps is an essential first step toward providing adequate coverage and mitigating risk.

Risk is a concern for insurance companies, as well. Denny Jacob, staff reporter for PropertyCasualty360, writes that the sharing economy requires an entirely different approach to risk understanding and management. In particular, it necessitates that providers gain a deeper understanding of behavioral economics—especially how consumer preferences and attitudes change in the face of risk.

Participation in the sharing economy can change a customer’s risk profile. For instance, a customer who drives for Uber is out on the road more often, attorney Jeremy Heinnickel says. Helso explains that some users may be less careful when interacting with shared vehicles, houses or personal property that isn’t their own, which in turn shifts the balance of risk.

“It will never be possible to escape the fact that we just don’t treat other people’s belongings with the same care as our own,” Disruption Business writer Sarah Finch points out. “Sharing has therefore opened up the insurance business to a whole new kind of market.”

One golden lining? In an era where fewer people are owning cars, houses or large quantities of consumer goods, the sharing economy creates an entire new class of people who need property and casualty coverage. “The gig economy has created the ability for more people to pick up ad hoc, part-time jobs,” Insurance Technologies Corp. CEO Laird Rixford says. “The amount of people that insurers, agents and brokers can now sell additional coverage to has exploded.”

How Sharing Economy Is Reshaping Insurance

The sharing economy is an economic system based on the use of technology to share assets or services between parties (individuals or organizations). Participants in the sharing economy use it because it can provide a more flexible and affordable option than some other economic systems. In this way, the sharing economy makes goods and services available to those who would not otherwise be able to access them. Much has been discussed about how the fast-growing web of consumer-to-consumer transactions that is the largest component of the sharing economy presents new opportunities for the insurance industry. The consensus view among insurers is that this potential market is large, growing quickly and under-developed yet tricky to insure with traditional products as it blurs the boundaries between personal and commercial lines. In April 2018, Lloyd’s published Sharing risks, sharing rewards: Who should bear the risk in the sharing economy? The report contained the following key findings:

  • Consumers in the sharing economy expect to be protected from the risks of transacting
  • Consumers and sharing platforms have opposing views on who bears responsibility for this protection
  • There is a significant untapped market of potential sharers who would be more willing to participate if protected by insurance

Maturer platforms in the sharing economy have established risk management programs and are working in partnership with the insurance industry to develop them further. For the many smaller platforms that make up the vast majority of platforms by number, risk management is at an earlier stage of development. The insurance industry has an important role to play in supporting platforms of all stages of maturity. This study aims to promote dialogue between platforms and insurers and, building on the previous report, has systematically analyzed the sharing economy to understand where insurance can support the growth of the sharing economy while also broadening the geographic scope of research.

This study, carried out by Lloyd’s, the world’s specialist insurance and reinsurance market, and Deloitte scanned the sharing economy for emerging insurance models, conducted a broad review of business and academic literature, surveyed 8,527 consumers across the U.S., China, Germany, France, the U.K. and the UAE, interviewed more than 20 subject matter experts, conducted a platform-only online questionnaire and held two workshops with representatives from sharing economy platforms, innovation experts and insurance practitioners.

See also: The Need for Agile, Collaborative Leaders  

The consumer survey data in this report is not an extension of Lloyd’s previous report as the sample, time period and questions were different.

The objective of this report is twofold:

  • To provide sharing economy platforms with an overview of key risks and the insurance solutions available to mitigate them.
  • To help the insurance market further understand how this sector of the economy needs new insurance products and where the most compelling opportunities for product development are located.

In summary, this research found:

  • Sharing is widespread: Approximately 500 million people across the U.S., China, Germany, France, the U.K. and the UAE have shared assets/possessions or services in the past three years to earn a profit; more than 680 million in these markets consumed them in the same period.
  • Currently, a number of platforms have mechanisms to protect users, ranging from transaction-embedded insurance to guarantee schemes. For users, the protection afforded by a platform is a key consideration in addition to the earning potential on offer.
  • Our market scanning indicates that an increasing number of sharing economy platforms provide insurance to their users that is automatically embedded within each transaction, with 57% of adults who have sold services or lent products in the sharing economy in the past three years being insured by transaction-embedded or personally owned cover.
  • Of those selling services and sharing assets, 37% of home sharers took out or upgraded a buildings or contents policy prior to sharing, and 49% of ride sharers took out a new motor policy or upgraded an existing one. Among delivery drivers, the figure is 37%, and 20% of freelancers took out or upgraded liability insurance before providing their services.
  • In addition, our analysis of the consumer survey identified pockets of high demand for insurance among four specific consumer segments. These groups represent product development opportunities for insurers, brokers and other service providers.
  • This study has identified numerous emerging models of sharing economy insurance; some combine elements of well-established commercial and retail covers in a static policy, and others provide more dynamic cover that fluctuates more in line with underlying risks.
  • Partnerships with sharing economy platforms form a key distribution channel. In addition to offering an opportunity to reduce customer friction in the insurance purchase process by embedding it within transactions, distribution via platforms offers greater potential for customer access, risk selection and pricing power than distribution via the open market.
  • Insurtechs are at the forefront of innovating sharing economy products and services and to date have focused on customer-facing links in the value chain.

You can find the full report here.

This article was written by Nigel Walsh and Peter Evans.

Why Commercial Insurers Can Rock

Commercial insurers have every reason to be optimistic. Thanks to the gig economy and the sharing economy, business launches are on the rise. And even though not every business launch is the next Fortune 500 company, insurers that are poised to take advantage of volume may find themselves with impressive market share.

Here are five quick reasons that commercial insurers in every line of insurance can be excited.

  1. Demographics are pointing to short-term and long-term growth because growth fuel will be coming from two separate sets of entrepreneurs with separate timelines for business maturity.
  2. Technology is supporting new channels for acquiring business that were not feasible before. Commercial insurers, in many cases, can look at current direct-to-consumer trends for real insights. Improved data use will provide better custom-fit insurance solutions for small and medium-sized businesses (SMBs).
  3. Product development opportunities for commercial insurers are growing out of gig-related business trends and lifestyle and purchase trends.
  4. Modern affinity groups will become more prevalent and important the more that people pursue gig-type employment. Insurers that traditionally offer voluntary benefits through employers will find that thousands of new types of business groups will become interested in both traditional and non-traditional products.
  5. More sharing, less disruption. As the sharing economy grows (and with it, a new type of commercial product need) commercial insurers will also be the beneficiaries of fewer negative disruptive trends, such as vehicle autonomy.

The further we dig into the gig economy, the more we find that small efforts by commercial and specialty insurers could yield big results. If an insurer is looking to build a case for preparation, some of the following points may be excellent support.

Gig workers, millennial entrepreneurs and senior entrepreneurs

Demographics are painting a clear picture of the new economy from the ground level. As we pointed out in our report, Future Trends 2017: The Shift Gains Momentum, project-based work and new businesses are on the rise.

The emergence of the “gig” or “on demand” economy is made up of individuals who work as freelancers, independent contractors for themselves or independent contractors for on-demand service providers. The gig economy has increased the number of small businesses. The 2016 version of Upwork and the Freelancers Union’s annual survey, Freelancing in America, estimated that 55 million people, or 35% of the U.S. workforce, have chosen freelancing as their means of work.

See also: Commercial Insurers Face Tough Times  

While freelancer and independent contractor work arrangements are not new, the relatively recent trend of on-demand workers, where workers and clients are typically connected through a digital platform, have caused state regulators and insurance companies to wrestle with questions of worker safety, liability and employee benefits. A growing list of insurers are providing products for the fluid dual coverage needs of people working through ride-hailing services like Uber and Lyft and home-sharing services like Airbnb. Insurers are also providing for the unique coverage needs of workers and companies engaging in contract-driven work.

Many of these independent jobs turn into larger businesses, and insurers can find relevant business launch trends among two separate groups — aging millennials and retiring boomers.

The Kauffmann Foundation’s statistics on entrepreneurship indicate that the “peak age” for starting a business in the U.S. is around 40. Millennials are on the cusp of mass entry into the “peak age” bracket for entrepreneurship. They show a strong desire to start businesses. By 2020, more than 60% of small businesses in the U.S. will be owned by millennials and Gen-Xers.

Baby Boomers are reaching retirement age in ever greater numbers. As they move to retirement, some will seek “gig economy” businesses and jobs to supplement their income. Many will start their own businesses. For those who already own their businesses, they will potentially pass them to the next generation. For those starting a business, this represents a growing segment.

In either case, the trends will cause growth in the need for commercial insurance. For more information on how demographics is shedding light on growth opportunities, read A New Age of Insurance: Growth Opportunities for Commercial and Specialty Insurance in a Time of Market Disruption.

Greater access to small businesses

Traditionally, commercial insurance was sold and serviced by agents and brokers. Smaller businesses were often underserved because they were simply difficult or expensive to reach. For the underwriter, they were also a bit cumbersome. Was it worth the time spent in research to underwrite the business? With small businesses, cookie-cutter products were an effective solution. But today’s small businesses are too varied for effective low-volume underwriting.

Digital sales and service will effectively fill a void for millennial and Gen X business owners, who prefer that kind of service for most every other transaction. Our research, The Rise of the New Insurance Customer, showed that all generations use multiple methods to research insurance prior to buying or renewal, but Gen X, Millennials and Gen Z use the widest variety of options, including digital channels like e-mail, texting/messaging/chatting and social media.

Like personal lines, commercial lines have historically relied on macro segments for classification and pricing purposes. With the advent of more data sources and sophisticated analytics, commercial lines have developed new segments for insurance like professional liability for specific businesses, all-terrain vehicles, yachts and pleasure boats, wineries, country clubs and numerous others.

In many cases, the business sales and service model for gig individuals and SMBs will be patterned off of modern direct-to-consumer models. Some insurers have already been capitalizing on the similarities. Berkshire Hathaway, Hiscox and Homesite are all examples of successful small business coverage direct writers that have found a formula that works.

Group purchasing and commercial and specialty product development

The gig economy is naturally isolating individuals who used to be covered under employers for standard health, life and other core employee benefits and voluntary benefits. Those who leave their jobs for gig-type employment will often take portable benefits with them, switched into individual coverage. They will be assuming a larger load of their core benefit costs or going uncovered. This will create a natural pooling. New potential “affinity” groups will arise with insurance opportunities for both group carriers and commercial insurers.

New work habits and preferences will also create new needs. For example, there is growth in demand for temporary work spaces, temporary storage spaces and occasional use of vehicles and equipment. Commercial insurers will be filling the insurance gaps for these types of policies. In many cases, the lines between insurance types may begin to get fuzzy as commercial insurers create risk products that go beyond personal lines but that still contain some of their attributes.

See also: Gig Economy: Newest Tool for Insurance  

As some personal lines business is lost due to vehicle autonomy and manufacturer liability (such as at Volvo) or sharing liability (such as at ZipCar and Maven), commercial insurers will be on the flip side of receiving additional pooled business. Many commercial insurers, already adept at handling fleet dynamics and logistics liabilities, will be extremely comfortable shifting gears and accepting other types of pooled risk.

If commercial insurers are truly interested in expanding into gig-created space, they should prepare their systems to handle not just large groupings of risk but individualized data contained within the risk pool. They should also keep tabs on mobile and insurTech developments, keeping their eyes on apps that cater to group sharing of any type of resources. Mobile apps may open commercial doors to unique product development. For example, an insurer may find that only one app is traditionally used by commuting cyclists or bike couriers. One unique product offering may help that insurer corner the market on a nationwide community.

How Sharing Economy Can Fuel Growth

In our last blog of our two-part series on the gig and the sharing economy, we looked closely at how the gig or “on-demand” economy will open up new markets to group and commercial insurers. You can read that blog here.

In today’s blog, we look at the sharing half of the gig and sharing economy. How will a radically shifting market, where borrowing and lending are more prevalent, open doors for commercial and specialty insurers? More importantly, how can insurers fuel the growth of this market by making borrowing and lending more palatable?

Is the Sharing Economy real?

The sharing economy is not only real — it has enormous potential for insurers. RVs make a great example. Recreational vehicle owners use their RVs an average of 28 days per year. With 8.9 million U.S. households owning an RV, that’s nearly 2.9 billion unused RV days per year. RVs are remarkably underutilized, making them a prime market for sharing. RV sharing sites, such as Outdoorsy, help owners to profit from their RV, while helping non-owners to gain access to RV use.

Multiply this idea many times over. ATVs are underused. Boats, chainsaws and generators are underused. Cars, homes, cabins, campsites, hunting property, musical instruments, bicycles, hockey rinks and electronics are all commonly underused. The only thing standing in the way of sharing them all is… insurance to cover a new type of risk.

See also: Opportunities in the Sharing Economy  

While some personal lines insurers are making a case for insuring some of these risks by adapting their personal lines products, it is commercial insurers that may have a leg up when it comes to understanding how to price risk for niche risks or groups and how to offer innovative products to these “small – medium” business owners.

Majesco’s forthcoming consumer research report finds that the consumption of ridesharing and home- and room-sharing services has a strong and growing appeal. The year-on-year growth of these activities was between 5% and 15% depending on the activity, highlighting a growing interest and use across all generations due to the digitally enabled capabilities driving ease of use. (For a further look at sharing economy trends, read Changing Insurance for the Digital Age, a collaboration between Majesco and Global Futures & Foresight.)

Experience is a factor

The sharing economy is related to the experience economy. As millennials enter the middle class, they are owning less “stuff” and putting more emphasis on having greater experiences. The sharing economy is fostering their desire to do more by owning less. With less of their income tied up in ownership and maintenance, they have more to spend on borrowing and renting. They are concerned about risk, but they don’t want a confusing transaction to sit in the way between them and the experience. So, insurers must find ways to build simple insurance experiences into the front end of the overall experience, or hide purchase experiences within the usage itself.

Insurance is the answer to some of the sharing economy’s most pressing issues.

Before “sharing economy” was even a term, sharing was at the heart of insurance. So, it would make sense that insurance would fit well into the sharing economy. Insurance, however, has had a product focus, reflected in the organizational silos based on risks and products, by separating personal versus commercial, rather than a customer focus that shifts between different risks (i.e. personal vs. commercial) based on the behaviors or use.

This is why sharing economy insurance incumbents may find themselves disrupted by Slice, Cover Genius and Metromile and similar entities that are popping up everywhere. Optimistically, however, the sharing economy is igniting an insurance renaissance with traditional insurers like Geico, Admiral, AXA and others asking themselves how they can serve people in the on-demand sharing economy … both personally and as a “business.”

In the sharing economy, it’s all about protection for the shorter timeframes and meeting the uncommon, on-demand need … allowing the customer to fluidly switch back and forth from personal to “commercial” needs. And, it’s all about giving owners and businesses incentives to lend property or assets. Insurance can answer these issues.

Insurance will fuel the sharing economy if insurers can build compelling value propositions

Rental companies are familiar with the risk of lending. They understand what is at stake, and they price insurance into their products or create contracts to handle damage. A new round of entrepreneurs is arising, however, who are using technology to match peer-to-peer lending. Websites such as MyTurn are enabling anyone to launch asset-sharing organizations. These types of companies are unfamiliar with how insurance can offer them protection and how coverage should be handled for a broader segment of products and users. This is an area where insurers can fill a growing gap.

The insurance value proposition in the sharing economy is to make both the lender and the borrower comfortable that the transaction can occur without the threat of loss. All that remains for insurers, then, is to determine where sharing is creating insurance gaps and how they can build, sell and service sharing products.

Data is critical

Consider how data is currently used in underwriting most products. For the most part, insurers pull from traditional data sources for underwriting purposes, and, though they may have reduced underwriting time, it is rarely real-time data. The sharing economy is different. It will require hyper-short underwriting loops based on real-time data because many aspects of sharing happen quickly and in a non-uniform pattern. The whole concept of on-demand insurance assumes the flip of a switch between being uninsured and insured.

On-demand insurance products should have the capability to score based on evidence analyzed from many reliable sources. Sharing economy insurers may want at least some scoring related to social profiles and common pastimes and behaviors. These aren’t easy data points to collect, but the further down the road on-demand insurance progresses, the greater the demand will be for every type of character-based data.

Cloud platforms are necessary

In essence, sharing economy insurance requires on-demand micro duration insurance coverage and blurs the boundaries between personal and commercial insurance.  But insurers face challenges including: creating a micro-duration insurance business model; real-time pricing determination based on micro-segmentation and varied factors; mobile-first user experience; low transaction value but high transaction volume; and low-touch, end-to-end operations.

See also: 4 Mandates for Agents in Sharing Economy  

To support these new coverages requires a next-generation core platform that is a complete architecture redesign with an alchemy of data, analytics, digital and processing components; customer-journey-focused solutions; significant reliance on AI for pricing and underwriting; and a light footprint and auto-scale capabilities for high volume support on cloud.  Furthermore, there has to be a strong “find and bind” integration architecture to tap into an ecosystem of innovative services. As we highlighted in our Cloud Business Platform: The Path to Digital Insurance 2.0 thought leadership report, many of the new insurers providing these innovative products have such core platforms in the cloud to allow them agility, speed and innovation in a continuously changing market.

Agility is (no surprise) highly necessary

For insurers to grab the opportunities as they arise, they will need to understand what new technologies can do to facilitate sharing relationships. They will need to use a next-generation core platform that is scalable and allows for real-time data and agile product development. Cloud platforms will lend themselves to many of the necessary features, but expert data integration and “find and bind” ecosystems will also be vital.

For a better look at growth opportunities within the sharing economy, don’t miss Majesco’s report, A New Age of Insurance: Growth Opportunity for Commercial and Specialty Insurance in a Time of Market Disruption.

A Scalable Workforce for Natural Disasters

According to a recently published white paper, insurance carriers can best deal with natural disasters by leveraging an on-demand model that gives them immediate access to an affordable and scalable workforce. By using workers in the field only when they need them, carriers can control costs while quickly and effectively meeting the needs of policyholders.

Natural Disasters Are Getting Stronger and More Frequent

ClimateWise, a coalition of the world’s largest insurance carriers, has reported that since the 1950s the frequency of weather-related catastrophes has increased six-fold. Not only have more than 20 storms causing a billion dollars or more in damage taken place since 2010, seven have hit since 2016. All of these storms have kept carriers busy assessing damage and processing claims.

Days after Hurricane Irma made landfall in 2017, more than 335,000 claims had been submitted in Florida totaling $1.9 million. That’s according to Florida’s Office of Insurance Regulation. However, the storm is predicted to eventually cost close to $100 billion.

See also: Do Natural Disasters Matter To Me As An Insurance Buyer?  

Nearly 88% of these initial claims were made by residential property owners. And, more than 10,000 business owners have reported damages from the storm. If the predictions are accurate, the damage from the 2017 hurricane season would more than double the costliest season on record in 2005. That was when Katrina and three other storms caused more than $143 billion in damage.

And it’s not just hurricanes that are keeping carriers busy.

During the first half of 2017, 49 weather-related disasters hit a wide range of locations across the U.S., including ferocious tornadoes and damaging hailstorms. And, most recently, devastating wildfire outbreaks in Northern California destroyed thousands of structures and caused more than a billion dollars in damage to the world-famous wine region.

Carriers Face Workforce Challenges

One of the major challenges that carriers face during times of catastrophe is how to deploy enough workers to the field to assess damage associated with claims that arise. Traditionally, carriers have understood the value of inspecting assets in-person in the field. However, maintaining an infrastructure capable of quickly completing these inspections in any location across the country has become cost prohibitive for most carriers.

It’s not that carriers are understaffed. It’s just that carriers’ workforces are spread too thin in times of crisis. As we saw in Florida during and after Hurricane Irma, many of the state’s adjusters were on the front line still working on claims made after Hurricane Harvey hit Texas.

A Scalable Workforce is Accessible

Carriers are operating in a cost-sensitive and hyper-responsive market. Even the most sophisticated and progressive carriers often find themselves struggling to effectively deal with scalability issues relating to managing a local, regional, or national adjuster workforce.

Thankfully, natural disasters don’t occur every day.

So, how do carriers manage their workforce to handle the surging need for workers after a disaster strikes as well as the lulls that follow? If they hire more full-time or part-time workers, carriers are in the position of laying them off when the disaster is over. This hiring and layoff cycle represents a huge challenge to HR departments. That’s because there is a significant administrative cost associated with recruiting, hiring, and onboarding new employees.

See also: Harvey: First Big Test for Insurtech  

What carriers need is a geographically-scalable workforce that is adaptable to regional nuances. This scalable workforce is made up of gig workers, also called on-demand workers.

Final Thoughts

A variety of breakthrough technologies and workforce alternatives are inspiring a fundamental transformation of the insurance industry. How well carriers interact with policyholders and gather information in the field will depend on how effectively the industry begins to take full advantage of the on-demand workforce to increase efficiency while lowering costs.

The key to responding to natural disasters – and keeping policyholders happy – is to rely upon an on-demand model. This model is capable of supplying an affordable workforce that can be scaled up or scaled down at a moment’s notice.