Income protection options grow for rapidly expanding gig economy workforce
Self employment is rapidly growing, but many gig economy workers and freelancers aren’t aware of income protection insurance.
Freelance and gig economy workers are increasingly turning to insurtech to protect their finances from downtime, but many still aren’t aware products designed specifically for such insecure employment exist.
These vulnerable workers have long struggled to gain access to many mainstream financial products because of their inconsistent cash flow and sometimes, a lack of substantial credit history.
They are now emerging as one of the hardest-hit groups from the coronavirus pandemic as demand for their services plunge, slashing work hours.
Julien Marchand used to work relatively full time in academia until he took the bold step of becoming a business start-up coach after seeing many tertiary educators don’t lose contracts, they “simply don’t get renewed”.
“The casualisation in academia is just enormous,” Mr Marchand told NCA NewsWire.
In some faculties, the rate is 50 per cent, he said.
“Especially if you’re not lecturing - if you’re a tutor, definitely you are on a contract, which you start at the beginning of the term and end at the end of the term, and then you beg, you beg for another contract.
“And then there’s summer holidays. There’s two months at university, so there’s no contract.”
For Mr Marchand, who frequently does his online coaching sessions from the beach, not working full time has the benefit of flexibility he needs to care for his daughter, who has a disability.
But it could have been stressful without his wife’s stable employment and the peace of mind of income protection insurance, which he says is even more important for single gig economy workers.
“It’s enough to know that you have it.”
Coverhero founder Naby Mariyam says 40 per cent of the workforce is expected to be self-employed by 2025, partly due to JobSeeker, which is providing a financial safety net while furloughed workers start up their own businesses.
Many people won’t return to traditional jobs after the pandemic ends, she said.
Jobs that are the most insecure include aged, health and child care work, influencers, yoga instructors and, of course, micro-entrepreneurs like rideshare drivers.
“People think the gig economy is just Uber drivers,” Ms Mariyam said.
“But the sector has become so big it needs representation.”
She said it had been a gargantuan challenge to crack into the centuries-old, risk-averse insurance sector even after US-based Lemonade “broke the mould”.
But her company, founded in 2017, is gaining momentum signing up individual clients and partnering with employers who either pay entirely for or subsidise income security for their gig economy workers, recognising they have social responsibilities just like traditional corporates.
“The market has catered for SMEs and corporates, and the gig economy, micro-entrepreneurs, all kinds of self-employed people, insurance hasn’t paid much attention to because they’re fragmented,” she said.
“Before, the sentiment from the industry has been ‘oh, it’s too hard - we can’t insure you’ and people would go from one broker to the other broker.
“It's about bringing insurance into the modern era.
“Our job is empowering people to do what they want to do.”