Insuring the gig economy through digitalisation 

The world of work was already being transformed by the rise of gig-economy platforms before the pandemic took hold. Then came the lockdown, turbocharging demand from consumers for touch-free services through apps and websites.

At the same time, an enforced rethink of traditional working practices and life priorities has made working from home a more attractive option for many people. Nowadays, the gig economy includes constituents ranging from food delivery riders, same-day ‘handymen’ and caregivers to professional service providers and consultants.

Gig worker protection gap

But while gig workers can enjoy flexible working hours and a better work-life balance, they often have to contend with an insurance protection gap, says Janthana Kaenprakhamroy, CEO of Tapoly. An award-winning digital managing general agent (MGA) for small and medium-sized enterprises and freelancers, Tapoly also provides underwriting services and an end-to-end, white-labelled Software as a Service (SaaS) solution that connects insurers with their distribution partners.

The gig economy is chronically underserved by traditional insurers for a number of reasons, says Kaenprakhamroy: “Gig economy policies can have high overheads as it can be difficult to price risk for non-typical working roles and patterns. Alongside this, the limitations of legacy systems prevent traditional insurers from offering flexible policies or communicating directly with different distribution partner systems.”

The protection gap leaves gig workers vulnerable to a range of risks, from illness to liability, and it can also mean they are unable to take on certain contracts that require specific levels of insurance, she explains. “Many home insurance policies don’t cover essential equipment such as laptops or mobile phones for work. Similarly, traditional car insurance doesn’t extend to cover commercial activities such as delivery drivers using their own cars.”

Commercial liability protection can be an issue because gig workers require higher degrees of flexibility at lower cost when it comes to choosing and buying insurance. “Hence many of them will go without insurance if they feel that the cost for their short-term contracts outweighs the benefits. In some cases they simply can’t find any cover that suits them.”

Enter the insurtechs

Thus an opportunity has arisen for insurtechs to help insurers to bridge the gap by offering embedded and on-demand insurance concepts, Kaenprakhamroy says. “Insurtechs such as Tapoly bring operational efficiency, while a data-driven platform can reduce underwriting and claim risks, improve customer journeys and increase retention rates. This approach makes it economically viable for insurers to enter the space,” she adds.

Tapoly uses specific small-business data and AI-driven pricing to ensure every customer is assessed on their individual merits. “This means our prices are fair and accurate, taking into account the fact that freelancers typically have complex activities and can’t be easily matched with one single profession,” Kaenprakhamroy explains. “Our end-to-end system allows us to automate most of our processes and reduce operating costs. We pass the resultant cost-savings on to customers and our insurance partners.”

Fast solution evolution

Fast-moving tech developments will keep driving the evolution of insurance solutions for the gig economy, Kaenprakhamroy believes: “I would expect most insurtechs to be based on cloud platforms with some aspects of artificial intelligence and machine-learning capability where possible. So having access to big datasets is an essential part of developing these ventures. Depending on the line of business, other technology such as Internet of Things and telematics may be used to help track, measure and validate risks.”

Tapoly itself is on a journey to become a no-code platform. “Part of our systems are already on a no-code basis. This means our clients won’t have to rely on developers to build their products and pricing on the Tapoly platform,” says Kaenprakhamroy.

“In future our clients will be able to build their own bespoke cover, where currently this process eats up profit for everyone in the value chain. Hopefully, we can contribute towards closing the uninsurance gap, which will ultimately benefit everyone.”