Do evolving attitudes about how we work mean that the insurance provided for businesses is due a rethink?
In the past, you would ask, ‘Where do you work?’ when getting to know someone. Now, you’re increasingly more likely to ask, ‘What do you do?’ instead.
Attitudes to work are changing. Championed by millennials (who will make up 75% of the global workforce by 2025), work is no longer being seen as somewhere you go, but something you do. The very idea of going to the office to do a 9–5 could be turned on its head. A Citrix report concluded that 70% of us could work from home as often as we come into the office by 2020. One expert explained how the people now entering the workforce have grown up with an online world where it’s possible to do almost anything from anywhere, so why go to a certain place every day for work?
It’s becoming increasingly apparent that, for a large number of jobs, a designated workstation in a fixed address is no longer necessary. For another growing number of workers, those in the ‘gig economy’, there isn’t even the concept of set working hours.
To try and stave off a future where the majority of workers will choose working at home, some companies make their premises a very comfortable, even fun, environment. They do this to make their staff want to be there, instead of being obliged. In the extreme, certain companies entice their staff to come in with pool tables, games consoles, nap areas, and by letting their pets in too2.
A business that allows employees to work from home won’t need to pay for a large building to accommodate hundreds of staff, but could instead rent a smaller space, anticipating fewer employees being on site.
With this in mind, is it time for a radical rethink of how we underwrite insurance policies for businesses? The traditional policy is based upon the premises that the business works from, but that just isn’t applicable for an expanding amount of industries.
WHAT IS THE GIG ECONOMY?
The term ‘gig economy’ has been in and out of the news a number of times during the last few years. It’s loosely understood by many and completely understood by few. To clear up the grey areas, we must delve into what it means for business and people working in the gig economy.
The gig economy is so named because workers carry out jobs on an individual ‘gig’ basis. A worker does a job in a piecemeal way and gets paid per job completed. Some examples of employers who employ workers in this manner are food delivery firms, taxi companies and other delivery services. At its heart, platforms deal out work in bits and pieces, often via an app, as and when there is customer demand.
It’s important to point out the differences between a gig economy worker and a worker on a zero-hour contract. While both workers are solitary contractors with no guarantee of work, how they are paid is quite different. Gig economy roles are normally paid per ‘job’ (eg packages delivered), while zero-hours contracts provide a set amount of compensation for time clocked in.
The main benefit often touted for this way of working is flexibility. Not being tied down to a traditional 9–5 job lets workers have more control over their work-life balance. However, a lack of job security can cause issues when personal or business situations change, and problems arise where being employed in this way is seemingly forced upon workers due to a lack of alternatives.
Businesses of any size can benefit from dipping into the gig economy. One obvious benefit is a substantial cost saving. Full-time employees are often the largest overhead for businesses, so fewer within the company means a lower cost-base for the business.
More specifically, the gig economy allows a business to hire a particular person (with a certain set of skills) for a project they might not have in-house skills for. Once the job is done, the employee moves on.
As well as this, there is less of an obligation for the business. A gig economy worker won’t simply be forgotten once a project finishes. Their inherent flexibility (and indeed skills) might be suited elsewhere in the business and they could move to different departments more freely than someone committed to a particular business area.
With the gig economy growing, some businesses may feel the need to adapt, and it’s important to understand the associated risks.
A business involved with employing gig economy workers opens itself up to a high level of employee turnover, which means the majority of the workforce isn’t necessarily ‘experienced’ and that the company is frequently having to run costly training sessions. Additionally, gig economy workers may not feel they are part of the business since they’re loosely ‘controlled’, while customers do affiliate the workers with the brand, and vice versa. Thus, a bad impression of one of the workers can knock onto the business’s reputation.
WHAT IT MEANS FOR INSURANCE
This disruptive ‘gig’ employment model is becoming increasingly common as more companies compete to offer rapid on-demand services and the UK Government has been hurried into considering how to protect the rights of those involved. Some gig workers are deeply unhappy with their employment rights (or lack thereof) and so lawmakers are looking at ways to protect them from exploitative companies. Insurance providers, in the meantime, are left uncertain of what will and won’t be necessary in policies designed to cover these individuals.
In the past few months, two tribunal hearings have gone against employers looking to classify staff as independent contractors and in October 2016, Uber drivers won the right to be classed as workers instead of independent contractors. The ruling means drivers for Uber are entitled to holiday pay, paid rest breaks and the national minimum wage. Examples like Uber highlight the need for businesses to look at their employers’ liability cover.
Additionally, some are also calling for a new classification of worker for those employed on a gig basis, to help narrow down underwriting considerations. From the gig economy worker’s perspective, there is a gap in the insurance market. Either new products could be designed especially for them, or existing offerings, like employment liability insurance or contractors’ insurance, could be extended.
Other covers that a gig economy worker might be interested in, on a bespoke basis, include optional extensions on private motorcycle, car and van policies (perhaps even on a ‘pay-as-you-go’ basis), tailored public liability, personal injury and sickness and insurance for the items that they’re handling. The gig economy and the changing nature of work aren’t things to be feared. The insurance industry needs to adapt its approach to account for the changing times.
Source: Allianz Insurance plc