If done right, gigeconomy workers have the potential to be a strong new segment fortoday's very saturated group benefits market. (Photo:Shutterstock)

For a long time, the first thought most had when the word “gig”came up was musicians, as in “the band got a gig.” In recent years,the word “gig” has taken on a broader meaning, encompassing arange of full- and part-time jobs done by thegrowing cohort of contingent or “alternative” workers.

Gigging is not, by any means, a small market: In October 2018, StaffingIndustry Analysts estimated the global gig economy in 2017 was $3.7trillion and rising. Gig Economy Data Hub, a joint project ofCornell University's Institute of Labor Relations and the AspenInstitute, places the gigging percent of the U.S. workforce by 2020at 30 percent. And Randstad, in its 2017 Workforce 2025report, stated that Canada's gig economy is an estimated30 percent of all Canadian workers—a number that includesindependent contractors, consultants, part-timers, and freelanceworkers—and is expected to grow to 35 percent by 2025.

Related: The external workforce: It's more than agig

The global job landscape is clearly evolving quickly, and theincreasing popularity of services provided by the full range ofcontingent workers means the gig economy is here to stay. This canbe a potential opportunity for life and health insurers to providebenefits to giggers, as long as there is willingness and appetiteto shift away from traditional ways of assessing risk anddelivering products.

One of the main aspects of these workers, whether they are onsingle long-term or short-term assignments or multiple task-basedassignments from platforms such as Uber or Taskrabbit, is that they lack access tothe sort of good and affordable group-style benefits that those ina more traditional employee/employer arrangement enjoy.

A June 2018 report from Bank of Montreal subsidiary BMO WealthManagement, “The Gig Economy: Achieving Financial Wellness withConfidence,” found that portions of Canada's labor market areshowing a voluntary shift from permanent to independent employment– especially among Baby Boomers and Generation Xers. This shiftmight not be entirely voluntary, but it is a reality. What thismight indicate is that, depending on the stage of an individual'swork life, a good possibility exists that at some point they mightwell become a gig worker. It could be the young university graduatehaving a tough time finding full-time work, an older person at alater stage in their career who is having difficulty findingfull-time work but is not yet ready to retire, or someone who hasrecently retired but still wants or needs to work.

The gap in gig

As gig workers in North America are concerned about incomevolatility, income replacement and affordable medical and dentalcare, a natural market clearly exists among gig workersfor employee benefit-style plans. In Canada, the governmentprovides coverage for necessary hospital and physician services andsome disability benefits, but not much else. Private insurance mustcover life, disability, supplemental health including prescriptiondrugs, dental and vision care. In the U.S., gig workers are evenless protected. Medicaid is available to cover basic health andhospitalization needs, but qualifying income levels are generallytoo low for those earning enough to live on. In both countries,income protection is a sizable concern – without sick days, incomeis lost every day without work, a huge financial hit for any gigworker.

Gig workers lack employee benefit-style cover for severalreasons: they don't think they need it; any available benefitpackages may be too expensive, a hassle to purchase, have too manyrestrictions or do not meet needs. Gig workers may not realize thatthere are benefit packages in the market that are available to them– they just have to find them or we need to improve how thesebenefit packages are marketed so that they are visible and caneasily be found!

The data is interesting:

• In Canada, a study commissioned by the Ontario Government foundthat non-traditional gig jobs, in fields such as IT, humanresource, marketing, finance, and accounting, are growing at twicethe rate of conventional jobs.
• A 2016 Randstad survey of Canadian workers found that25 percent worked independently, with IT professionals andengineers most likely to work this way.
• In the U.S, according to the Federal Reserve and the U.S.Government Accountability Office, between 30 to40 percent of the U.S workforce engaged in gig work in2017. One element to be aware of is that only 10 percentof gig workers in the U.S. make their livings entirely fromgigging; the rest use it for supplemental income. And in somecases, these workers still do not have group insuranceprotection.

Information about gig workers and the gig economy is stillevolving, as the gig worker cohort itself is still evolving. Whathas not changed, however, is a self-employed individual's need forfinancial security and therefore affordable and easy to purchasegroup benefits.

Group insurers are generally conservative, and often adhere tothe principle that a little is better than nothing when unsure of arisk. Hence most products intended for workers who are not fulltime generally provide only limited benefits.

A new class of benefits

The opportunity is clearly sizable: the market is underservedand growing, and its members need financial protection fromcatastrophic and/or expensive health events. If done right, gigeconomy workers have the potential to be a strong new segment fortoday's very saturated group market.

However, there are challenges: How can insurers create employeebenefit-style plans for gig workers that meet both workers' needsand their own value propositions? And how can these be marketed toworkers successfully?

Just tinkering existing products, whether for group orindividual cover, will not work. Gig workers don't need theburdensome paperwork, medical evidence requirements, and lengthycontract wording of most individual products. Insurers would alsodo well to avoid the temptation to use traditional group benefitplan designs that are tailored to employers, rather than to theworkers themselves.

A fresh approach has a stronger chance of capturing this market.Such an approach would initially use solid group underwritingprinciples as a guide, until companies have enough experience tocraft specific underwriting guidelines for giggers.

If insurers truly want to offer employee benefits customized forgig workers, with the advantages of group coverage without actuallybeing a group – insurers need to not only understand the gigeconomy and its workers, but determine how best to develop productsand plans that will serve their needs and add value whilemaintaining the known advantages of group coverage such ascomprehensive benefits, choice, flexibility, no medical evidencerequirements, competitive rates, and ease of purchase. Thisincludes offering products with competitive maximums, developingunderwriting guidelines for this market, contract language that isspecific to gig workers and offering speed and simplicity inapplication and enrollment processes.

Customization options could include:

• Short- and long-term disability products that take into accountfluctuations in worker earnings and gaps in employment when settingbenefit percentages, waiting times, maximums offered, andlimitations and exclusions.
• Finding ways to hold onto gig workers as policyholders as theymove in and out of the gig economy. For example, if a gigpolicyholder gets a traditional job with group benefits, they canput their gig benefit plan on hold (for a fee) for a specifiedmaximum period. If during this period, the worker returns to thegig economy, benefits can be reinstated with a few parameters, suchas a pre-existing condition exclusion on the LTD or a maximumamount covered for items such as prescription drugs and dental inthe first year.
• Establish underwriting guidelines for gig economy workers;e.g., only specific occupations or limited benefits for certainoccupations, pre-existing condition clauses for life and disabilitybenefits.
• Review all contract language so that policy wordings are gearedtoward the gig worker.
• Remove impediments such as extensive medical evidencerequirements, too much fine print, too many steps to enroll, andconfusing policy wording.

With today's technology and the vast group expertise thatInsurers have, there is a great opportunity to create a fullbenefit offering for gig economy workers. All we need now iswillingness.

Carole M. Bellm is assistant vicepresident of group underwriting, group reinsurance, for RGA Canada.

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