Insuring the Gig Economy in Australia
With the rapidly growing gig economy, there has been an increase in the number of people working as contractors, freelancers or entrepreneurs. But with this increase is a new issue that’s threatening the very future of self-employment: insurance. Gig workers are being unreasonably priced out of obtaining insurance coverage for various reasons. This blog aims to give gig workers in Australia an insight into how it is to insure their gig economy job and why so many insurers are failing to provide reasonable access to it.
Introduction to the Australian Gig Economy
People who participate in the "gig economy" operate their businesses on their own as independent contractors and bill clients for the goods and services they provide. The most common services provided by the "gig economy" in Australia include:
- Ride-Sharing Services
Ridesharing is similar to hailing a cab with a friend, only that you don't tip them in beer; instead, you pay with cash. Ridesharing is a great alternative to cabs when you don't want to walk or catch public transportation, making it ideal for a night out on the town or for those who prefer not to walk. Booking and following a ride with a rideshare service is made simple by the use of mobile apps like Uber, Ola, DiDi, Shebah, GoCatch, and Bolt.
- Delivery Services like Uber Eats, Menulog, Deliveroo, MACROS, Youfoodz, HelloFresh, and Chefgood. One of the numerous benefits of food services is that businesses may satisfy their existing customers while attracting new customers. In the end, delivery apps are responsible and capable of reviving the hotel business in its entirety. Experts say that Australian consumers have formed new habits that will be difficult to break. For restaurants, the new norm is to offer dine-in and takeout options.
- Personal Services
For instance, when clients engage a person to perform creative or professional services like graphic design and website development, the worker is considered to be self-employed.
Emerging Risks to the Gig Economy
In terms of their labour and financial security, gig workers are increasingly putting their own money on the line. A circumstance such as this one arises when a worker's ability to maintain control of the assets he or she employs in the course of their work is dependent on elements over which they have no influence. A vehicle purchase is something that a good number of Uber drivers accomplish using credit. There are a number of circumstances that could result in a driver being "decommissioned" by Uber, such as the firm changing its payment policy or the market becoming oversaturated with new Uber drivers. One of these scenarios is described below.
There is a powerful incentive for platform providers to take precautions to ensure that their workers are not classified in any way as employees. If this were to occur, the platform providers would be responsible for providing benefits to their workers, which would significantly drive up the amount of money they spent. In addition, the financial viability of the platform would be called into question if it relied on the actual assets provided by "workers." This would cast doubt on the platform's ability to generate revenue.
The primary argument made by the platform providers is that gig workers should be considered to be independent contractors rather than employees in any capacity. In the traditional economy, contractors such as truck drivers have also supplied their own "tools." However, in the gig economy, workers do not collect any goodwill that can be resold or leveraged for financial gain. This is one of the key differences between the traditional economy and the gig economy. Platform providers are the ones who come out ahead, while employees end up with fewer options.
Helping The Gig Economy
The gig economy is a new and flexible sort of job that does not give the same benefits that traditional full-time employment does, such as paid vacation time, unemployment insurance, and protection for minimum wage. Independent contractors may be more vulnerable to harm than normal employees because their companies may not provide insurance coverage for them. In addition, given that gig employment does not neatly fall into either commercial or personal insurance, it is possible that they do not have a complete understanding of all of the risks to which they are exposed. It is true that your personal auto insurance will not cover accidents that take place when you use your vehicle for commercial purposes, such as transporting passengers. Ride-sharing platforms, however, may still put their employees in danger even if they have adequate insurance coverage for themselves.
Due to the nature of the gig economy, many employees face significant barriers to obtaining insurance and other forms of security.
For the insurance industry to take advantage of these newly available opportunities, it needs to develop new ways of thinking about insurance and come up with adaptable and flexible products to meet individual customers' requirements. One of these opportunities is the provision of individualised health insurance packages for gig workers.
When it comes to determining the precise makeup of the workforce of the future, there are a number of factors that cannot be determined with certainty; however, all indications point to the fact that the gig economy will only continue to expand and that insurance policies will continue to evolve.
The gig economy will be able to take advantage of benefits such as health insurance, retirement plans, stock options and grants once they are no longer restricted to traditional work alone. Even if this may already be happening in some cases, such as among major companies like Airbnb and Uber, and even if some larger insurers are moving forwards with basic, monthly, and flexible insurance plans, this may only be the beginning of what will likely be a trend.
This is where Coverhero comes in. Coverhero protects you by protecting your income. We've built a world where you can do the work you love with the security and confidence that comes with breaking the laws of society so that you can do it. As far as defending your hustling, we're the team you've been looking for all along.
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