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On-Demand InsurTech for the Gig Economy

Not many people, even those in the insurance industry, would be aware that the earliest documented insurance policy on paper was registered in Italy during the Italian Renaissance.

It was a commercial policy dated 13 February 1343 and covered 10 bales of linen on a trip from Pisa to Sicily. Cut to 676 years and 7 months later – which is about now, and the insurance world is in the middle of yet another transition.

This one is led by what is commonly referred to as a ‘Gig Economy’ and it’s changing the fundamentals of the insurance industry in a manner that was not envisioned even 10 years ago. Blame it literally and metaphorically on the “urbanisation” of the global economy.

The world today is remarkably different from what it was even 10 -15 years ago. Dynamic shifts led by ever-improving and spreading of the internet as well as the emergence of data-driven technologies such as AI and machine learning among others has digitised every fundamental aspect of our lives.

This has not only led to the emergence of large technology giants such as Uber, Alibaba, Facebook and Airbnb but also led to a dramatic shift in the way people work. The old 9 to 5, 5 -day work week is a model that for a large segment of the global population has been consigned to the dustbin of history.

Instead, it’s been replaced by what economists call the ‘gig – economy.’ This is what I meant when I used the term, ‘urbanisation’ of the economy.

It’s characterised by a workforce that is highly mobile, variable, technologically savvy, always connected and works in a non-defined manner to cater to an on-demand model of consumption – literally like uber drivers or the food delivery guys who will deliver in the middle of the night – no questions asked.

It also includes freelancers (an ever-increasing breed ), entrepreneurs and such like. They’re characterised by their ability to take – risks and work hard and an increasing number are now middle -class and millennials – a generation unlike any before it and one that is paving the way the work culture will, in all probability, be defined for generations ahead.

The gig-economy is also characterised by rapid growth (almost explosion) of new businesses (and if you look around you, you will see this happening in India as well). Just to give an example, almost 40% of the US economy is now a gig-economy.

That’s not small by any yardstick. And study after study has shown how members of the gig economy function distinctively different than those out of it – not just defined by their comfort with and use of technology but also their lifestyle habits.

One study I remember specifically in this regard was the difference in how Uber drivers in NY functioned vis – à-vis their more traditional black and yellow cab counterparts and how this affected how they bought insurance.

It stands to reason that sooner or later; the insurance sector would also get affected by the gig -economy. A dominant characteristic of the traditional insurance model is defined by traditional models of risk mitigation, subject


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