How the booming gig economy and contract employment is reshaping insurance needs

Since COVID-19, more Americans have been making the switch to independent contract and gig work, especially in the trucking and transportation space, which is changing the types of insurance coverage needed.

According to James Walloga (pictured), Allied World’s head of accident and health (A&H), this is a prime time for brokers and insurers to develop and refine occupational accident coverage programs to keep in touch with changing professional dynamics and provide better safeguards in case of a loss.

“The average salary for an independent owner operator is anywhere between $50,000 and $80,000 a year. They don’t have significant income in order to cover any medical expenses, or if they become disabled on the job,” he said. “This form of protection helps them with these potentially costly events.”

In an interview with Insurance Business at this year’s Target Markets conference in Scottsdale, AZ, Walloga spoke about why a whole new crop of independent contractors need to be informed about occupational accident plans. He also discussed the need for more personalization.

Reaching out to new customers

According to a survey from McKinsey and Company conducted in 2022, it was estimated that 58 million Americans were working independently, which amounts to roughly 36% of the population.

With the expansion of the eCommerce market and gig economy since the onset of COVID-19, this has opened up a whole new workforce that the insurance industry needs to tap into.

“I think that we as, as an industry, are still learning how to get to these folks, and how to educate them on why occupational accident is beneficial both professionally and personally,” Walloga said.

“How do we reach those end users? How do we then explain to them, here’s the product that we have to offer? And then how do we administer this coverage to them? These are questions we’re still trying to iron out.”

He noted how the gig economy is still in its infancy, which means occupational accident coverage will surely undergo a transformation as this economy matures.  

“Occupational accident as a product has a fair amount of growth because the industries that it supports are growing as well,” he explained.

Walloga also stated that this contractor boom has created a perfect opportunity for insurers, MGAs and brokers to utilize their knowledge and insight to propose insurance as not just a business expense, but a crucial element of personal finance planning.  

“If a person leases a truck to become an owner-operator but is injured on the job and can’t continue working until they are better, occupational accident has provisions that cover those expenses until they are recovered,” he said.

“The more that you’re able to tie insurance to financial planning, it becomes more relevant to consumers.”

A diversified workforce needs more unique solutions

Walloga noted how the gig economy boom has also seen an increase in the types of individuals who are performing this type of work in the transportation sector, whether it’s trucking or deliveries.

“There’s more women drivers today than ever, while the driving community, on average, is now getting younger,” he said.

This has necessitated a push for more customizable options and value added to meet the concerns of a contemporary fleet of drivers who are spending a lot of time on the road.

“Sixty per cent (60%) of drivers are on the road more than five months a year, especially the long-haul truckers,” Walloga said.

Allied World has created a hotel convalescence benefit for people who are injured on the job and require medical care but may not be able to rest and recover in a hotel if they are far away from home.

 “It’s important to include benefits that you may not immediately link to accident benefits, but these are expenses that are tied to an injury,” Walloga said.

“We want to be able to offer contemporary products that provide value to an independent and make this type of work more longstanding and sustainable.”