Last month Alliance Insurance and on-demand insuretech Dinghy announced that they would forge a partnership to start catering to the fast-growing freelancer market.
It’s a smart move, really, because the rise of ‘redundant-preneurs’ cannot be ignored. When it comes to the growth and size of the freelancer market there are a couple of figures bandied about.
Dinghy points out that the workplace is changing and that we’re seeing an era of hustlers and 'slashies' – all affectionate terms levied at entrepreneurs who flit from one profession to another or work from coffee shops to work under ‘the buzz’.
Dinghy point out that the number of women working as freelancers has grown by a whopping 63%. This is no surprise because private nursery fees offering full time care, average well above £12,000 per year for children aged 0-3 according to Royal London, and it’s costs such as these that often make it financially unworkable to return to full time employment.
So, what does catering to freelancers entail for the insurance industry? If Dinghy’s model were a blueprint for what’s needed, it essentially boils down to flexible insurance (that stops and starts as the needs and jobs change), which is priced fairly too.
This would be more appealing for freelancers, whose income typically varies or who get paid sporadically.
Don’t be too hasty in dismissing this audience as Millennials who’re unsure of their career prospects or mom’s that can’t afford childcare fees. There are people from all walks of life entering the freelancer market.
Dinghy point out that the number of freelancers aged 50 and above increased by close to 200% in the 15 years between 2001 and 2016.
Redundancy is also a key factor contributing to the rise of freelancers. According to Direct Line, 13 million adults have been made redundant at some point in their careers.
Then, after being made redundant, four million people (35%) decided to use the opportunity to become their own boss. Of these, 2.2 million or 57% started working for themselves as a freelancer or consultant.
Another impressive fact is that this has helped to created millions of micro-businesses all over the UK, which actually accounts for 96% of all businesses according to the Department for Business, Energy and Industrial Strategy.
The types of businesses that redundant people invest in or initiate vary. According to Direct Line, the majority (68%) set up a business relating to their previous job but a third chose redundancy as an opportunity to try something new.
The most popular sector to enter following redundancy is education, followed by retail. Management consultancies are also increasing in popularity as are IT or web design businesses.
If you’re looking for new markets to tap into this surely is one sector that can’t be ignored. The world of employment, and how we view, it is changing at a rapid pace. This is a sector that needs cover for their businesses, homes, cars, lives and to insure against any disabilities that could render them unable to work.
If they have enough years of work ahead of them, they’ll need suitable pension products to invest in too.
The opportunities to design products for this sector of the market are endless. Of course, catering to freelancers doesn’t come without its risks. Income can be unpredictable but if brokers, insurers and those in insuretech get it right, they’re likely to tap into a very loyal and appreciative following.