Tag Archives: taskrabbit

Is Ownership a Thing of the Past?

Ask a millennial who has just bought a car, “How much did you pay for it?” and the typical answer would be something like, “about $300 a month.”

The same scenario will play out with other purchases such as a home, an expensive computer and virtually any other big-ticket consumer purchase.

There is nothing wrong with putting the monthly cost (access) of a product ahead of the final price (ownership), because, in the mind of today’s consumers, ownership is increasingly the exception to the rule.

Less Emphasis on Ownership

In one of my previous articles, I summarized this point with the following:

“Rather than worrying about status, ownership and hierarchy, think about the benefits of access, collaboration, trust and sharing.”

In fact, most millennials, (born 1985 and later) are in the accumulation and the consumption stage of their lives but are giving very little credence to ownership. For millennials, ownership signals responsibility and maintenance; two terms that this consumer group has very little interest in. Owning something is not convenient.

Although this new attitude may signal a disruption to the status quo (baby boomers), this new idea of access over ownership can easily be embraced by manufacturers, marketers, retailers and, most importantly, insurers.

Things that we rent, lease or share, also require a manufacturer, marketer, retailer and insurance policy. Rather than own – we share.

Let’s dig a little deeper.

See also: Navigating Through Tough Times With The Aid Of Employee Ownership  

The Sharing Economy

There are many prominent examples of this shift from ownership to access. Consider the two sharing economy platforms that started it all: Airbnb and Uber.

Airbnb was founded in 2008 when three determined entrepreneurs realized the need for more guest accommodations that could be booked online. Their approach to the hospitality industry started with a blow-up mattress but is now valued at $30 billion. The Airbnb story is a groundbreaking example of the sharing economy and how it disrupted the status quo.

Uber, which got its start about the same time as Airbnb, set out to resolve a perceived transportation need. And what a ride it has been! Created as an online method to hire a car and driver in large metropolitan areas, the company created an online platform that connects riders with drivers through an innovative on-demand mobile application. The simple, yet brilliant, strategy has garnered more than one billion users.

What Was That About Ownership?

And what does all of this have to do with ownership? Everything!

These two platforms own nothing. They don’t own homes or cars. Yet Airbnb has more than two million properties worldwide, and Uber has more than one million vehicles on its platform.

Access: But Wait, There’s More!

What if you need to get an expensive evening gown but plan to use it rarely? Check out Rent the Runway where you can access what you may not be able to afford to own. You can rent a $3,000 gown for $75.

What happens when you must travel out of state to attend a funeral and can’t afford the high costs of a kennel? Welcome to Dog Vacay. This platform provides a list of people in your area who love dogs and will charge less than a kennel.

What if you want to impress someone by pulling up to their home or office in an expensive sports car? No problem. Turo can match you with the owner closest to you who will rent that sleek, fast-moving ride by the hour or by the day.

Your in-laws just called and said they would be joining you for the weekend. Your schedule is hectic, and your apartment a disaster. You check out TaskRabbit to gain access to someone in your neighborhood who can’t wait to clean your apartment so your in-laws won’t think you’re a slob.

By now, you should be getting the picture that consumers are sharing their consumption needs and services without considering ownership, and the price tag that comes with it.

The Impact on the Insurance Industry

Insurance professionals must adapt as millennials kick over the economic tables. Carriers must respond by creating products to manage the sharing risks or, at the very least, offer endorsements for personal and commercial products currently in the marketplace.

Questions must be answered. Like…

  • If I rent my expensive tuxedo on a sharing site, does the platform provide coverage, does my renter’s policy provide coverage or is my tuxedo now considered business personal property, meaning I have to get commercial coverage?
  • If I decide to board a neighbor’s dog through a sharing site, does the sharing site provide liability, or will my homeowner’s policy cover a dog bite from a neighbor’s dog when I’m charging that neighbor a boarding fee?
  • I know I can get a landlord’s policy to cover a home I’m renting, but will coverage apply for daily rentals? What if I’m renting the home I live in while I’m on vacation? Will my HO3 cover when I’m renting my residence for a week or two?

Although insurers have begun to respond to the home-sharing and ride-sharing scenarios, what about all the other products and services that are now being shared rather than purchased?

See also: How to Lead Change (Part 2)  

Agents need to ask all current and prospective clients about the reality of renting their assets, to determine if a coverage issue is on the horizon.

Agents must let insurers know what’s changed in the marketplace and how they can transfer these new risks in an efficient and affordable manner.

If you have not become familiar or heard much about the new sharing economy, shouldn’t it be your responsibility as a trusted adviser to uncover and point out the risks that are unfamiliar and likely not disclosed in a traditional client/broker conversation?

Educating clients must be a top priority heading into 2017 and beyond.

How to Embrace Workforce Flexibility

Because of the economic crash in 2007, many people were left scrambling for work, any work.

Those who were determined, but still came up short, looked inward to their skill sets and assets to find relief.

The answer quickly became obvious; what is now referred to as the flexible workforce or sharing economy, is made up entirely of freelancers and independent contractors.

This new group of freelance workers now makes up more than 35% of U.S. workers and earned more than $1 trillion last year.

This information is found in a recent survey, “Freelancing in America: 2016,” which was published by Upwork, one of America’s largest freelance workplace platforms.

The Gig Economy: A Brief Introduction

The gig economy is a term that describes a portion of the U.S. economy that is made up of freelancers. It is often used, interchangeably, with “sharing economy,” “collaborative consumption” or “access economy.”

This growing army of gig workers has become an integral part of the workforce, available on an on-demand basis.

This has allowed innovative businesses to pivot and remain nimble. Indeed, in an era where consumers are increasingly more interested in access over ownership, flexible workforces have become powerful tools for businesses.

Although many believe this segment of the workforce may be a fad that will soon to be diminished when unemployment numbers eventually plummet, a closer look at available data indicates otherwise.

Reportedly, the gig economy has grown every year over the past five, and there are solid indications that this trend will continue.

See also: 9 Impressive Facts on Sharing Economy  

What the Feds Report

Well, they haven’t quite caught up yet – although they’re getting there.

The labor experts in D.C. minimize the gig economy by referring to gig workers as “contingent workers” (any position not expected to last longer than one year).

The feds report that that this segment makes up about 4% of the total workforce.

Looking more closely, however, one can easily determine that the most recent survey numbers used by the Bureau of Labor Statistics refers to data accumulated more than 10 years ago.

I don’t feel like we need to delve into why that’s an issue, correct?

How the Gig Economy Is Growing

The gig economy continues to increase as traditional companies look for solutions to workforce issues.

Although “outsource” is a term that consumers and traditional employees detest, no one has a problem with a temp in the workplace.

But when you use the word “outsource” (which is what a temp employee is), many Americans think of good American jobs being sent overseas where workers will work for pennies on the dollar.

The gig economy is growing because entrepreneurial gig workers now have the means to share with others how they can become freelancers and realize their dreams of being self-employed.

Platforms such as Upwork, Airbnb, Uber, TaskRabbit, WeGoLook and many others seamlessly connect this new freelancer class with those who have paid work available.

This entire process is all facilitated by innovative mobile technology and apps.

What’s not to love about that?

It’s certainly not for everyone, but for those who even feel a mild burn of the entrepreneurial spirit, they can use their skills or assets to become part of the gig economy.

Why The Gig Economy Is Growing

The gig economy (flexible workforce) continues to grow because America needs it to grow.

Companies can access skilled on-demand workers for one-off or continuing tasks.

Thanks to on-demand worker platform, businesses can now access expert freelancers to perform critical functions that are temporarily needed.

According to Jobshop, nearly one-third of B2B companies plan to hire gig workers over the next five years.

Further, a report by Fieldglass indicates that 95% of B2B companies not only understand, but recognize, the need to incorporate the gig economy into their business models.

The American workers are changing. Many regard employment as a job totally unrelated to what their life goals may be.

Goals that were formed in their minds at a young age and continue to burn deep in their hearts.

Even highly skilled workers earning terrific incomes imagine what it would be like to do what they love to do rather than what they have to do.

Although born out of necessity, gig work has become a compromise for millions of hard-working Americans.

Freelancing allows them to choose to do what they love and what they are best at. It provides the flexibility to work the hours of their choice, spend more time with family and become highly skilled experts in a field they love.

Embracing the Flexible Workforce

The insurance industry can embrace this growing flexible workforce made up of skilled freelancers in a number of ways.

For starters, insurance carriers can use skilled gig workers to create efficiencies across many channels in their organization.

Although major insurers have embraced technology, they continue to fumble the ball streamlining their processes and supply chain.

Similar to the federal government, large insurers have many layers of bureaucracy that at times put the breaks on workflow, innovation and even communication.

The result typically frustrates the consumers they have committed to serve.

In the digital age where consumers crave access, convenience and timely services, cumbersome policies and bureaucracies will fade. Quickly!

Areas that need rethinking and refocus are those where consumer interaction is critical.

Communication

There are many critical areas of communication that need not be assigned to full-time workers.

These tasks are generally performed on-demand and for specific reasons and following certain events.

Using a skilled freelancer who can be available on an as-needed basis for a short period makes more sense than using a highly paid (when you consider compensation plus benefits) full-time employee.

See also: Benefits: One Size No Longer Fits All  

Claims

Streamlining the claims process is a priority for every insurer because it’s not only a profit-earning department, it has many functions considered menial to an experienced licensed adjuster.

Tasks such as consumer visits, picture taking, damage verification and more could easily be assigned to a local gig worker.

Why maintain a network of thousands of field employees nationwide when you can access hundreds of thousands of on-the-ground gig workers when you need them?

Although claims activity can be forecast to a certain degree, many insurers are caught off guard with the arrival of events such as a natural disaster.

This often leaves carriers scrambling to recruit independent contractors, who sometimes are unwilling to perform many of the tasks that a freelancer can provide.

Marketing

Because marketing is about communicating with various market segments, it makes sense to contract with gig workers who specialize in that particular demographic.

For example, millennials communicate differently than Generation Xers, who talk differently than Baby Boomers.

Although each category can have similar insurance product needs, they prefer to learn about it, and make the purchase, in different manners.

Whether you are an agency or an insurer, outsourcing your marketing needs to a gig workers can make more sense than loading your payroll with different personality types so that you can accommodate the preferences of the various market segments.

Or, many companies are electing to leverage gig workers to augment their current full-time staff. Gig work isn’t a full-time or part-time discussion – they can be complimentary.

Whether you designate this growing on-demand labor force as the flexible workforce, gig economy, freelancers or outsourcing, there is no doubt that this workforce can provide skilled on-demand workers to the insurance industry.

These are workers who are doing what they know best and are passionate about.

Principals in the insurance industry should look to this flexible workforce to streamline processes that affect consumer satisfaction and save payroll dollars in the process.

As the gig economy continues to grow as a viable employment alternative for many, traditional insurers can get ahead of the curve by leveraging them and embracing flexibility.

9 Impressive Facts on Sharing Economy

I am so excited to participate in the InsureTech Connect 2016 Conference taking place in Las Vegas this week. If you haven’t picked up your tickets yet, do so. It’s going to be a blast!

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I am also honored to be speaking at the conference, alongside amazing entrepreneurs like Jacob Brody of Helpful Networks, Isaac Oates Founder of Justworks and Jeff Oberstein, chief customer officer and head of science, Global Consumer Insurance at AIG. I’m actually a little nervous.

Our discussion on Wednesday, Oct. 5, is titled “Sharing Economy’s Impact on the Insurance Ecosystem.” We will attempt to unpack the implications of the rise of the sharing economy for the insurance industry, and how it’s changing the nature of work, and workers.

In this vein, I want to pave the road slightly with a few key insights that will help frame our discussion.

The sharing economy has been termed many things over the years: gig economy, freelance economy, circular economy, collaborative consumption, and most recently “digital matching firms” by the federal government.

No matter what you term it, this new industry has changed how we consume, much like insurtech has disrupted the traditional insurance industry. How products and services are delivered is changing before our eyes. And this is a good thing.

See also: 8 Exemplars of Insurtech Innovation  

To better situate our thinking for InsureTech Connect 2016, here are nine impressive facts about the rise of online marketplaces, something we now term the sharing economy.

1. PricewaterhouseCoopers predicts that the sharing economy will grow to a $335 billion industry by 2025. In 2013, this industry was valued at $15 billion.

Why it matters: We are in the midst of a transformation.

2. In 2013 alone, it was estimated that revenue passing through the sharing economy into people’s wallets was more than $3.5 billion.

Why it matters: Can you imagine what that number is now? The sharing economy is becoming a new employment marketplace faster than we may think.

3. Airbnb has hosted 60 million guests since its founding and now has two million properties listed. This is almost double the hotel rooms currently owned by the largest hotel chain, Starwood-Marriott, which has 1.1 million rooms.

Why it matters: Airbnb was founded in 2008. So, in eight years, Airbnb has more than overtaken the largest hotel chain in the amount of rooms available. This is disruption 2.0.

4. Sharing economy work is overwhelmingly part-time. Consider that the vast majority of Uber drivers work less than 30 hours a week, with 66% saying they have no set hours. Further, the average Airbnb host rents out her property for 33 nights a year.

Why it matters: This is hardly full-time employment. It’s exactly what we see at WeGoLook; people are leveraging our platform to supplement income through flexible part-time work. It’s patchwork employment, and this is good because it gives people options and employment flexibility.

5. According to Time, 44% of U.S. adults have participated in the sharing economy in some fashion. The same study found that 22% of Americans have sold services in the sharing economy. And, the vast majority of those who offered services in the sharing economy described their experience as a positive one.

Why it matters: Americans are using and selling in the sharing economy. Simple as that.

6. According to JP Morgan, working in the sharing economy boosts incomes by 15%. For Airbnb hosts, on average, JP Morgan found that sellers earn an extra $314 a month, or $533 for Uber and TaskRabbit.

Why it matters: People are actually earning decent supplemental income, and they love it.

7. Although millennials use the sharing economy more than other demographics, we cannot forget about the Baby Boomers. According to research by Emergent, 18% of workers in the sharing economy are 55+. This study concludes that “the number of older Americans seeking this type of work will likely continue to grow.”

Why it matters: We all think of innovative technology and equate it with millennials, but Baby Boomers are right in there as well and will require new tools as they retire and age.

8. There are currently 50 million freelancers, or gig workers, in the U.S. By 2020, 50% of the US workforce is expected to be a freelancer.

Why it matters: We are moving to a freelancer workforce. People are craving flexibility and are willing to trade the certainty of a 9-to-5 job with benefits and pension, for the freedom of freelance and gig work. At WeGoLook alone, we’ve seen our gig workforce grow from zero to now more than 27,000 in just seven years.

See also: How to Insure the Sharing Economy  

9. The sharing economy makes people happy by making their lives affordable. For instance, 86% of respondents from a recent PwC survey agree that the sharing economy makes their lives more affordable.

Why it matters: There’s a reason people are gravitating toward access over ownership. It makes their lives easier, more affordable, and offers them income generation opportunities with almost zero startup costs.

So, how will the insurance industry adapt to the sharing economy and growing disruption of the insurtech revolution? You’ll have to meet me in Vegas to find out.

How On-Demand Economy Can Prosper

Even some of the most successful innovators in history would tell you, “Don’t quit your day job.” George Eastman worked full-time while tinkering in his mother’s kitchen on the inventions that let him found Eastman Kodak in the late 1880s. A century later, Steve Wozniak worked at Atari while developing the computer that he and Steve Jobs would turn into Apple. The fact is: No matter how great the idea, or how great a worker’s skill, it’s hard to mesh with an existing enterprise or any other group.

The reason is explained by Nobel laureate economist Ronald Coase in his influential 1937 essay, “The Nature of the Firm.” He theorized that people choose to organize themselves in companies and corporations rather than contracting their services out directly because of transaction costs. He cited: search and information costs; bargaining and decision costs; and policing and enforcement costs. “Within a firm, these market transactions are eliminated, and in place of the complicated market structure with exchange transactions is substituted the entrepreneur coordinator, who directs production,” he wrote.

Essentially, marketing, selling, pricing, negotiating and getting paid as a self-employed person isn’t all rainbows and unicorns – the work critical to running a business can be enormously complicated, time-consuming and costly.

Thanks to technology, much has changed since 1937. Mobile connections, broadband and ubiquitous data have reduced transactional search and information costs considerably. It is much easier, faster and economical for a small business to effectively compete with larger firms.

There has been a major shift in our buying behavior, too – consider how profoundly Amazon or iTunes has altered the way we discover, compare and purchase goods. Companies like Uber have used technology to reduce our search and information costs, as well as our bargaining and decision costs and policing and enforcement costs. If reducing one transactional cost shifts the economy, then reducing all three transforms it….

We are now officially unlocking the potential of the on-demand economy – one that will revolutionize the 21st century workplace and workforce. It’s so new, we haven’t decided on a name for it yet; it goes by various monikers like Uberization, the gig economy, the on-demand economy, the access economy and the peer-to-peer economy.

This on-demand economy offers the exchange of goods and services between individuals instead of from business to consumer. The people providing goods and services aren’t necessarily employed by the company connecting them with the customer, either. Many are independent contractors or freelancers.

Technology acts as the intermediary automating the handling of pricing and payments, vetting providers through a user-rating system and matching providers with consumers’ needs. This intermediary speedily brings together supply and demand via a platform that can be controlled by an app on any mobile device. The platform makes information available and accessible in the manner most efficient for the business, ensuring that transactions that are started are more likely to be concluded. The platform often obviates bargaining, directly polices its members, enables community-driven self-policing and enforces the terms of interaction. The costs of this coordination is added to each peer-to-peer transaction.

The new economic model is a highly efficient, productive and cost-effective marketplace. Platforms like Luxe, Lyft and Uber offer transportation services; Caviar, Doordash and Munchery deliver food from local restaurants; Instacart will shop for and deliver grocery orders; AirBnB, HomeAway and Onefinestay connect renters and homeowners offering available space with people seeking accommodations; Handy, Taskrabbit and Thumbtack will help a household find an available plumber, drywaller, cleaner or furniture assembler; and delivery services like Postmates and Shyp will pick up, pack up and send packages.

There appears to be no lack of supply or demand in this rapidly evolving phenomenon. Almost 53 million Americans currently serve as providers to on-demand platforms, at least part-time. Having goods and services on demand satisfies our need for “instant gratification” and allows consumers to find a broad array of competitively priced services 24/7 – they can get what they want, when they want with the touch of a few buttons.

The advantages for providers are many, too. No longer saddled with the time-consuming chores of the self-employed, like marketing and promoting services, negotiating transactions or chasing down payments, the on-demand economy provides freelancers with a turnkey, hassle-free method of accessing a large market of ready-and-willing customers whenever they want to work. It’s freelance freedom and flexibility with almost no barriers to entry.

You don’t need to be an economist to envision how the on-demand economy business model can benefit the marketplace as a whole: The Ma & Pa local restaurant that can easily deliver through a fleet without incurring staffing costs can substantially expand its market and service underserved markets. People can now use their cars to transport passengers and generate income rather than leave vehicles parked in driveways, resulting in a very good use of underutilized resources;. And, when a student can help an eBay seller package and deliver parcels on the fly, a job and professional support network are created that had not previously existed.

The new economy is here. It’s poised to democratize the marketplace and its workforce by maximizing underused assets, creating jobs, expanding markets and meeting the needs of underserved markets, all while creating a faster, easier way for us to get what we want, when we want it.

But this new business model comes with new world challenges as the distinction between personal and commercial activities becomes blurry. To thrive, policymakers, regulators, insurers and the companies enabling the new economy will have to work together to design a platform that protects consumers when they are operating as businesses.

A New Ride-Sharing Service Raises Even More Questions

The U.S. has seen an explosion in what is often referred to as the emerging “sharing economy” or “collaborative consumption.” In an increasingly connected society where most people have access to mobile communication devices, peer-to-peer services are springing up, based on mobile apps that consumers can use to access transportation services that historically have either not existed or were controlled by often highly regulated business or government entities.

One might argue that this is not a new concept, given that hitchhiking has been around since not long after the wheel was invented and was quite common in the 1950s and 1960s until it fell out of vogue as its inherent dangers gained more attention from the media and increasing numbers of consumers owned or had access to automobiles or mass transit.

But what we’re witnessing today is a relatively new phenomenon. Uber, Zimride, Lyft, ZipCar, Turo, GetAround, TaskRabbit, JollyWheels, RentMyCar, Zilok, CityCarShare, bla, bla, bla, bla, bla….

Which brings us to BlaBlaCar, the latest incarnation of car sharing. Founded in France in 2006, BlaBlaCar now claims to operate in about a dozen European countries and is exploring expanding into other countries, such as India and Brazil. BlaBlaCar bills itself as a “ride sharing” mechanism, as opposed to “car sharing.” That falls somewhere between fee-based hitchhiking and a somewhat irregular share-the-expense car pooling arrangement. Details on how the system operates can be found at the company’s web site.

BlaBlaCar currently does not operate in the U.S. There is some question as to whether it can be as successful in the U.S. as it claims to be in Europe. Owning and operating a vehicle in Europe is far more costly than it is in the U.S. There is also a perception that Europeans may be more trusting of, or accustomed to, riding with strangers than Americans are. In addition, there are social issues to consider in the U.S. For example, a BlaBlaCar driver can refuse to transport particular passengers. If such a driver is white and a declined passenger applicant is black, would there be civil rights issues that could be addressed by claims or suits for discrimination?

The question addressed by this article is, if BlaBlaCar were to begin operations in the U.S., would the personal auto insurance policies of its drivers cover this type of activity? According to the terms and conditions on BlaBlaCar’s web site and media articles about their service, most auto insurance in Europe covers this exposure because there is no “profit” involved. The passenger fee is referred to as a way to share the cost of a trip. The terms and conditions include a stringent hold-harmless provision and a liability cap to protect BlaBlaCar.

However, the company’s position on how personal auto insurance responds in Europe would be immaterial if it were to commence operations in the U.S. Many, if not most, personal auto policies in the U.S. may exclude BlaBlaCar activities regardless of whether a “profit” is sought or made. The decision could depend on the facts of each situation and the exclusion wording in the policy. The first question is whether there can be assurance that a driver is not making a profit. Second, the policy language may not consider profit to be an issue. For example, these are the two most common exclusions found in U.S. personal auto policies:

  • We do not provide liability coverage for any “insured”…for that “insured’s” liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance. This Exclusion (A.5.) does not apply to a share-the-expense car pool.
  • We do not provide liability coverage for any person…for that person’s liability arising out of the ownership or operation of a vehicle while it is being used to carry persons or property for a fee. This exclusion (A.5.) does not apply to a share-the-expense car pool.

This language is taken from two different edition dates of the “ISO-standard” personal auto policy. In the case of use as a “public or livery conveyance,” ISO’s filing memorandum stated that the intent of this exclusion is to preclude coverage for vehicles available for “hire” to the general public for the transportation of people or cargo (e.g., taxis, sightseeing vans and package delivery services). The exclusion is not contingent on the profitability of the person or enterprise holding their vehicle out to the general public for hire.

In the case of a vehicle used to “carry persons or property for a fee,” there is no mention whatsoever of whether this fee generates a profit for the owner/driver. In one case, this exclusion was held to apply to someone who used his pickup truck to transport a friend’s son’s belongings to college in exchange for gas money.

However, both exclusions admittedly exempt a “share-the-expense car pool.” So what is meant by a “car pool”? One dictionary definition describes it as: “an arrangement between people to make a regular journey in a single vehicle, typically with each person taking turns to drive the others.”

Note the reference to “regular” and alternating as drivers. On the other hand, Wikipedia’s discussion of the term “carpool” implies a potentially broader concept that could include how BlaBlaCar operates. This muddies the water to the point that no blanket statement can be made about how U.S. personal auto policies might respond to claims arising from BlaBlaCar and similar ride-sharing services. If this were to become a significant exposure, one might expect U.S. insurers to define “car pool” in a way that precludes coverage for these services.

In the past year or two, we have seen various forms of “car sharing” exclusionary endorsements introduced by ISO and individual insurers, though many of them still do not fully address the “share-the-expense car pool” situation. The only conclusion we can reach at this point is that how a vehicle is being used and how that use fits with an insurance policy’s insuring agreements and exclusions are becoming much more important and more difficult to determine.

The insurance industry is not known for its innovation nor its ability to respond quickly to emerging social changes. The usual reaction is to exclude an unanticipated exposure until the industry can reasonably measure and predict the risk of loss. The growth of car- and ride-sharing (not to mention home-sharing) is something that will need to be closely monitored by the industry.