What’s a freelancer to do? The insurance market needs to step up

(I originally published this on LinkedIn on Oct 12, 2015)

Has the freelancer revolution begun? I honestly do not know but I have come across several articles referencing notable growth in the number of freelancers and/or self-employed individuals over the past couple of years. Also, some people believe that this trend will continue and these individuals will prove to be a more meaningful portion of the future workforce.

I wear two hats these days — one being P&C insurance consultant and the other self-employed business owner. I enjoy both roles and I occasionally get the opportunity to merge the two when I’m shopping for my own business insurance or interacting with my self-employed/freelancer brethren curious about my profession. And while my experience is anecdotal, many of these individuals remain uninformed or unaware of their professional, general and/or property risks as relates to their work. And of course, I am not even factoring in cyber or data breach risks — which is a growing issue from large multi-nationals to the solopreneur.

This is hardly a new problem.

Honestly, I feel this market segment is largely ignored, under or un-insured. Some large insurers possess product solutions for this segment but overall, it does not appear to be a robust marketplace. Even with the rise of e-agents that have begun to focus on this market as well as a few emerging insurers that are actively going after this segment, there are a lack of adequate options. This was true with respect to my experience at least and it seems to be similar with others that I’ve spoken with. When I put my insurance hat on, I can understand why: it is often a small premium/policy for insurers, data on this diverse segment may not be adequate, sales/marketing expenses add up and customers potentially require some degree of consultation (phone, in person or however). The economics can be challenging — I can imagine the cost/benefit may not seem desirable for some carriers.

Also, on the demand side, many freelancers/self-employed professionals do not perceive their insurance exposures and it falls by the wayside. And if it never comes up in the course of their business activities, it is not viewed as worth exploring.

I obviously do not shop for business insurance very often but when I do, my needs are simple. Also, given my background in the industry, I have a pretty good sense of how to evaluate coverages and I am relatively confident in my insurance choices.

But that is just me.

When I’ve shopped for insurance in the past, I approached a few large exclusive agents as well as some independent agents; frankly, my experience has been mixed or subpar. By no means do I intend to indict all agents or insurers. When I was finally able to secure coverage, the agent I worked with was very helpful and informative. I just feel there is room for improvement.

So, what’s the bottom-line? Clearly, there is opportunity for some insurers to capitalize on this. But equally or even more important, there is a need for all industry participants (distributors and underwriters) to engage in more active education and outreach on the potential need for coverage among these professionals. If prognostications about this market segment come to fruition and it does become a more meaningful part of the economy, it will have implications not just for freelancers’ or contractors’ insurance needs but also the companies they contract with.

And with that, what do you think? Also, if you are self-employed or do freelance work, I would be curious of your experience and if you feel there are adequate options available?

Neil K. Rekhi is the founder of Premium Intel, which provides market intelligence and insights focused on the Property and Casualty (P&C) marketplace to support strategic analysis and decision making.