The sharing economy is growing up fast, message is that the growth will reach or surpass PwC’s projections which show that five key sharing sectors — travel, car sharing, finance, staffing, and music and video streaming — have the potential to increase global revenues from roughly $15 billion in 2015 to around $335 billion by 2025. Massive growth.
Linked to this we are seeing companies going from start-up to unicorn in just a few years. This is unmatched in history.
What does this mean for the insurance industry? The sharing economy is breaking down the business model of insurance that is very well established. the new sharing economy is responsive, customer focused, data driven, short term, growth focused, multi relationship and tech based. Traditional insurance in nearly the polar opposite of this.
To be responsive and to meet the challenges for both the platform users and the providers there needs to be a new type of insurance company. One that is truly digital and built based on paying claims rather than processing policies. For insurance to be relevant to this new business model the digital insurer needs to be there when the claim is to be paid. This is trust.
Insurance is all about trust but somehow this has been eroded over the decades and lost in the depth of the contract small print and the layers of complexity. Customers need to know that the claim will be paid. The platform would need to know the claim would be paid. The digital insurer needs to understand how to deal with high-volume short-term policies and fast claims payment. If the insurer can do this then trust will be earned back. It’s all online, simple, clear, transparent processing of policies and claims.
GiG Work. As of 2014, 34% of the US Labor force, or between 54 and 68 million people, is comprised of independent workers. These workers are not all GiG workers but the numbers are growing an this is is being driven by the sharing economy and the gig economy.
GiG work is expected to grow to 40% by the year 2020 (Freelancer’s Union, 2014). On-demand platforms such as AirBnB, Uber, TaskRabbit, and Upwork have played an enormous role in growing the independent labor force. While platform workers currently account for only about 15% of the independent labor force (McKinsey Global Institute, 2016), the rise of the Sharing Economy platforms have significantly shifted mindsets about the nature of independent work, making supporting one’s self independently increasingly appealing and appear more feasible.
By empowering freelancers and other independent workers to connect with businesses and buyers of their services at a scale that has never before been possible, these platforms are inspiring an unprecedented number of workers to flee the constraints of the traditional workplaces in favor of more autonomy and flexibility in their work–in the process helping to create an entirely new kind of labor force, the Gig Economy. This is the driving force behind the sharing economy and with that the force that will re-shape the insurance industry.
Here at MIC Global we understand these forces and they are driving our company forward. We believe in the new economies and are building process, services and policies to fit into the new business models of today and the future.
The speed, reach and data that the new platforms operate on is driving change. Put simply, they get global fast and consume more data than traditional business. The insurance industry needs to respond equally to these challenges and build new products and services to meet these clients needs. The new type of insurer needs to be responsive, innovative and yet remain focused on underwriting the risk. Data is the key to this, however having the data is one thing successfully applying it to new insurance products is another. Having 1 million customers per day on hourly variable contracts is totally different to 1 million annual policies. The data velocity alone is a huge item to grasp.
Interested to know more? we have curated 3 great reports that are focused on the gig and sharing economy together with insurance. These reports are independent and cover the areas in depth.
Gig economy insurance report Cake & Arrow
At MIC Global we are focused on changing the way business insurance is developed and processed. We are digital insurance. We are in the forefront of change; developing policies by the season, job, by the hour, by the day and by the Km, thus fitting our model to that of the platforms and the way small and micro businesses see risk. We are unbundling business policies so that the cover offered fits with peoples and business needs or the actual job or process being undertaken. Making Business Insurance transactional and available.