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

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

The gap in gig

As gig workers in North America are concerned about income volatility, income replacement and affordable medical and dental care, a natural market clearly exists among gig workers for employee benefit-style plans. In Canada, the government provides coverage for necessary hospital and physician services and some disability benefits, but not much else. Private insurance must cover life, disability, supplemental health including prescription drugs, dental and vision care. In the U.S., gig workers are even less protected. Medicaid is available to cover basic health and hospitalization needs, but qualifying income levels are generally too low for those earning enough to live on. In both countries, income protection is a sizable concern – without sick days, income is lost every day without work, a huge financial hit for any gig worker.

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

The data is interesting:

• In Canada, a study commissioned by the Ontario Government found that non-traditional gig jobs, in fields such as IT, human resource, marketing, finance, and accounting, are growing at twice the rate of conventional jobs.
• A 2016 Randstad survey of Canadian workers found that 25 percent worked independently, with IT professionals and engineers most likely to work this way.
• In the U.S, according to the Federal Reserve and the U.S. Government Accountability Office, between 30 to 40 percent of the U.S workforce engaged in gig work in 2017. One element to be aware of is that only 10 percent of gig workers in the U.S. make their livings entirely from gigging; the rest use it for supplemental income. And in some cases, these workers still do not have group insurance protection.

Information about gig workers and the gig economy is still evolving, as the gig worker cohort itself is still evolving. What has not changed, however, is a self-employed individual's need for financial security and therefore affordable and easy to purchase group benefits.

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

A new class of benefits

The opportunity is clearly sizable: the market is underserved and growing, and its members need financial protection from catastrophic and/or expensive health events. If done right, gig economy workers have the potential to be a strong new segment for today's very saturated group market.

However, there are challenges: How can insurers create employee benefit-style plans for gig workers that meet both workers' needs and their own value propositions? And how can these be marketed to workers successfully?

Just tinkering existing products, whether for group or individual cover, will not work. Gig workers don't need the burdensome paperwork, medical evidence requirements, and lengthy contract wording of most individual products. Insurers would also do well to avoid the temptation to use traditional group benefit plan designs that are tailored to employers, rather than to the workers themselves.

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

If insurers truly want to offer employee benefits customized for gig workers, with the advantages of group coverage without actually being a group – insurers need to not only understand the gig economy and its workers, but determine how best to develop products and plans that will serve their needs and add value while maintaining the known advantages of group coverage such as comprehensive benefits, choice, flexibility, no medical evidence requirements, competitive rates, and ease of purchase. This includes offering products with competitive maximums, developing underwriting guidelines for this market, contract language that is specific to gig workers and offering speed and simplicity in application and enrollment processes.

Customization options could include:

• Short- and long-term disability products that take into account fluctuations in worker earnings and gaps in employment when setting benefit percentages, waiting times, maximums offered, and limitations and exclusions.
• Finding ways to hold onto gig workers as policyholders as they move in and out of the gig economy. For example, if a gig policyholder gets a traditional job with group benefits, they can put their gig benefit plan on hold (for a fee) for a specified maximum period. If during this period, the worker returns to the gig economy, benefits can be reinstated with a few parameters, such as a pre-existing condition exclusion on the LTD or a maximum amount covered for items such as prescription drugs and dental in the first year.
• Establish underwriting guidelines for gig economy workers; e.g., only specific occupations or limited benefits for certain occupations, pre-existing condition clauses for life and disability benefits.
• Review all contract language so that policy wordings are geared toward the gig worker.
• Remove impediments such as extensive medical evidence requirements, too much fine print, too many steps to enroll, and confusing policy wording.

With today's technology and the vast group expertise that Insurers have, there is a great opportunity to create a full benefit offering for gig economy workers. All we need now is willingness.

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

Read more: 

• Gig work, data privacy and other workplace trends to watch
• The external workforce: It's more than a gig
• Gig workers help small businesses, but bosses are nervous about it