The future of gig economy insurance
As a result of the recent 10.5% inflation rate in the UK (December 2022) and the consequential cost of-living crisis, many unemployed and employed workers alike are resorting to more flexible means of income such as ‘gig jobs’. This increase in the ‘gig’ labour supply could in turn encourage higher demand for gig insurance and lead to a potential increase in the market size of gig economy insurance.
Inflationary pressures within the UK have led to increases in a range of costs for individuals, for example within the food category, according to the British Retail Consortium (BRC) NielsenlQ Shop Price Index, inflation rose to its highest ever recorded, 13.8%, from 13.3% in December 2022. In a bid to tackle these inflationary pressures, the Bank of England (BoE) has risen its interest rates (February 2023) to its highest level in 14 years, 4%, however, this will adversely affect borrowers including homeowners with mortgages. Thus, the offset effect of inflation on individuals has encouraged many to consider jobs within the gig economy, with over 25% of consumers adopting or considering a second job within the gig economy according to GlobalData’s 2022 UK Insurance Consumer Survey.
A gig economy refers to a labour market which heavily consists of independent contractors and freelancing and includes ‘gigs’ such as food delivery and transportation. Despite the flexibility offered to individuals, these jobs do not provide the same level of security and protection as full-time employment, thus employer’s insurance is not included and these individuals are subject to greater risk. Therefore, the demand for tailored, gig insurance to provide reassurance and protection for ‘gig workers’ is likely to rise, as seen by the increase in the number of insurers offering convenient policies directly to these workers.