Defining the working method of Y-generation with their lifestyles and consumption habits, ‘gig economy’ is also shaking the foundations of traditional insurance. Kerem Vardar from KPMG Turkey states that Y-generation offers a huge opportunity for the insurance market as they prefer to work part time or free time.

‘Gig economy’ concept which is regarded as a byproduct of the era of digital destruction is one of the biggest trends affecting the existing labor force in the last 10 years. 

The concept of gig economy defines those who work part time or free time for temporary jobs, and is transforming the traditional economy and changes the way how companies they hire them do business.

According to researches done in USA, more than 35 percent of the labor force are workers of the gig economy. This rate is estimated to reach 43 percent in 2020. Size of gig economy in Europe is growing day by day as a secondary source of income, particularly in Austria and Italy. In countries such as China, India, Indonesia and Brazil, gig economy is estimated to take over the position of traditional working method as the primary source of income.
Four main reasons why gig economy is increasingly gaining popularity especially among Y-generation are listed as below:

• Search for flexible alternative jobs rather than the traditional method of working from ‘9 to 5.’
• Supporting the source of primary income
• Focusing on fields of interest
• Transition to retirement

Technology effect
Developing technology is the driving force behind the rapidly growing gig economy. There are two main digital platforms supporting gig economy:

• Platforms based on labor force: Driving cars (Uber), delivering food or products (Deliveroo), building furniture, cleaning (TaskRabbit)
• Platforms based on assets: Websites where people rent or sell products and/or services (Airbnb, eBay etc.)

In time, those platforms have begun to transform from customer to customer (C2C) markets into Business to Customer (B2C) and business to business (B2B) markets.

No security

Since it is based on temporary jobs, gig economy does not provide employees with fringe benefits such as health/life insurance, unemployment insurance, or paid leave. That’s why, it provides a huge opportunity for the insurance market.

Swift adaptation and cooperation
Kerem Vardar, KPMG Turkey Market Leader of Financial Services, states that the first expectation of gig economy employees from insurance business to provide swift solutions, as in all other services. “New generation employees expect flexible and short-term insurance packages from the market. In addition, they do not wish to pay insurance premiums for periods when they are unemployed.”

Kerem Vardar underlined that insurtech startups can respond to the demands of gig economy employees more rapidly. “However, big insurance companies can also adapt to new expectations swiftly. Cooperating with new-generation startups is a swift way of offering those solutions,” he said.

Vardar highlighted that the next step for insurance would be to reshape health insurance and pension plans according to the gig economy. “Together with big players such as Airbnb and Uber, insurance companies have already started to reach out to employees with simpler and flexible insurance plans that are based on monthly premium payments,” he added.