The Ubers and TaskRabbits of the world fueled the creation of a whole new layer of the labor market, which now spans across (arguably) every imaginable industry.
Just like with every new industry, the gig economy is now in need of products and services, designed specifically for its unique market. Finance and insurance products, are, of course, on top of that list. Already, many FIs have jumped on the gig bandwagon; GreenDot, for example, partnered with Uber and Mastercard last year to offer instant pay for on demand workers.
Designing insurance products for this niche has been a struggle that fintechs (like the San Francisco-based Bunker) are aiming to resolve. But don’t expect any major shakeups in the near future, warns Rashmi Melgiri, COO of CoverWallet–an online platform that offers insurance management services to its clients. The company focuses more on “traditional” insurance products, but Melgiri is convinced that there is a huge opportunity for gig-specific insurance products.
“There is absolutely a space for Uber-specific products or microproducts for just one gig, it’s actually a problem in the industry today,” she said at Empire Fintech conference this week. “There’s a massive opportunity in building products tailored to individual jobs, but personally I think it’s a long ways off for the industry, and I think it’s gonna come from the startups in the space.”
The growth of the freelance economy creates the need of auxiliary products, according to David Goldberg, principal at Corigin Ventures, and there are several ways in which insurance companies and fintechs can tackle this opportunity.
“[One of the] ways is to take the current insurance products, and move them into the new industry, and then there’s a way to create new products that are specifically focused on new segments or business models,” he said. “There is also a way to reintroduce the same products with better underlying data or customer experience.” It’s a “massive” market, according to Goldberg, and the hardest part for investors is figuring out which segments to focus on.
Both insurtech and the freelance market have been on an upward curve lately. The CNBC estimated recently that over the past 20 years, the number of gig economy workers has increased by 27% more than regular payroll employees. In the meanwhile, reports suggest that between 2011 and 2017, VC funding for insurtech companies grew 31% annually.
The two industries seem to be a match, made in fintech heaven.2 - Readers Like This Post