By Tom Murray, Head of Product Strategy for LifePlus Solutions at Majesco.
17.4% of gig workers deliver food using bike whilst over 25% deliver legal, accounting or professional services and 39% provide office work from their computers. Thus the amounts individuals can earn from gigging can be quite significant.
The gig economy differs from the standard economy in that people are paid for their work rather than their time, with the result that their earnings are in a constant state of flux, whether from the variability of the work, the variability of the price that they can charge, or just from the fact that they can pick and choose when to work.
This variability poses a difficulty for them in assessing their needs when it comes to financial protection and the amount that they can put aside for investments. The result is a major challenge for the financial services sector and the life and pensions industry in particular. It is challenge that must be met as a sector as big as the gig economy is much too big to ignore.
The standard approach for the financial sector has been to sit down with prospective customers and analyse their financial needs based on an assessment of their income, among other things. In days gone by, it was relatively straightforward to work out what the prospect’s needs where and how much they could afford in terms of financial protection as their income was stable and likely to be predictable.
This won’t work with the majority of the gig workers as they are unsure just how much extra they will earn month to month. Of course for the many who have full time jobs as well, the disposable part of their income is coming from the gig work they do. How then are financial advisers to approach those whose income is by its nature variable and therefore the affordability of products very difficult to predict?
If their income is going to be variable then it is important for gig workers to have a lot of control over the amount of money they are putting into their life and pension products. The key to giving them this ability is to provide them with dynamic customer portals, allowing them to vary their contributions as their income varies.
Products which can accept premiums that vary on a regular basis are therefore going to be more attractive to this cohort than standard products which issue reminders of missed premiums when the customer doesn’t have the money in their account. Products also need to be able to cope with regular higher payments so that when workers have increased earnings, they can contribute more.
The stickiest customer portals will be those that also build in intuitive tools that encourage customers to set targets for themselves and show graphically their progress against them. Real-time information on the value of their investments and the amount they need to reach their target could encourage them to take on that extra piece of work to achieve it.
Insurers looking to succeed with the growing market of gig economy workers must have the kind of digital tools that the workers themselves are familiar with, as the gig economy is a very digital workspace. They need a cloud-based platform providing digital financial services via easy-to-use portals around the clock. They need to rethink their approach from being one of annual reviews of customers financial situation to one of constant real-time updates to support workers who are reviewing their financial situation online regularly and seeking to make constant adjustments in line with their earnings.
Financial services is becoming more demand-led and insurers need to raise their own game in order to provide the real-time services that can fulfil this demand. The gig economy is set to keep on growing as the overall economy is increasingly digitised. Insurers who aren’t actively planning to disrupt their current business models and focus on the needs of this growing subset of the UK’s workforce are going to miss out on an expanding and lucrative market.
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