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The Future of Work, Platforms, and Insurance

IMG_0459The on-demand  economy is driving new methods of work. New products and services  that leverage digital tools are emerging rapidly. Much of the development – and use – of these tools occurs outside of traditional work arrangements. Until recently, this had little impact on insurance, but that is changing.

The nature of work is changing (again)

In some respects, the on-demand economy is not new. Arun Sundararajan, writing in the Guardian, notes that the 18th-century economy, described by Adam Smith in the Wealth of Nations, was a market economy comprised of small-scale entrepreneurs who engaged each other in commerce.

This construct worked well until the efficiency of mass production and distribution drove the development of larger corporations, populated by salaried workers.  However, the rise of digital platforms has enabled a new revolution, re-incarnating the individualization of the 1700s, with a few twists.

The Platform Economy

Sundararajan contends that unlike Smith’s ‘invisible hand’, the new enterprises – e.g., Uber, Airbnb, etc. – actively control the assignment of work through software platforms. “Uber, not individual drivers, sets prices. Airbnb trains its hosts to be better providers of hospitality.” Sundararajan writes.

But the workers also have entrepreneur license in some aspects. Uber drivers elect when to work.  Airbnb ‘hotliers’ determine the parameters for stays.

While some workers are attracted to the new model, the shaky nature of  the overall economy is adding push to the pull.

Since the 2008 financial crisis, Canadian employers large and small have been looking carefully at long-term employment commitments. Many have found that contract and temporary work arrangements provide greater flexibility than permanent positions. At the beginning of 2016, CBC News reported that the number of Canadians in temporary work arrangements was growing nearly six times as fast as overall employment.

But insurance is different, right?

For as long as I have been associated with the insurance industry, one of the major benefits touted by employers and employees alike is that insurance is somewhat insulated from dramatic employment shifts. Because insurance  needs are fairly constant, whether we are in good economic times or bad, underwriters, claims service providers, insurance accountants,  and support personnel are still required.

Perhaps not as different now as we thought …

Business and technology are having an impact. David Smith, CEO of Global Futures and Foresight, and respected insurance futurist, recently completed a white paper for Fineos, “Are Insurers Ready for the New Worker?

Smith notes that platforms “are emerging today that challenge existing insurance models.” This is required in order to become more customer-focused. A potential result, according to Smith: “In the insurance industry it’s foreseen that up to 99 percent of underwriting and 98 percent of claims activity could be fully automated.”

This would put insurers into the same position as other corporations who are seeking customer engagement combined with  economic efficiency.

Change is coming (and coming and coming)

Increasingly, we are seeing insurers – large, medium, and small – picking up the pace with technology. We see investment in employees and partners who can bring new digital thinking to the fore.

Many of these initiatives are melding permanent and contract workers into virtual teams, increasing collaboration in seeking goals.  But there is one final element that needs to be addressed:  “How do we keep pace?”

It’s phenomenal!

This is not a one-time training event.

Regardless of the worker status – contract, permanent, or some other arrangement – it behooves us all to seek continuous education and exposure to new thinking. A recent posting on the Singularity Hub noted that Finland was adopting a new model called the “phenomenon-based” approach.

The Finland approach is based on four skills that Singularity Hub Editor-in-Chief David Hill believes “are central to working in teams, and a reflection of the ‘hyperconnected’ world we live in today.”  These skills are communication, creativity, critical thinking, and collaboration.

Note: Technology skills are not on the list, for one reason: We don’t know what they will be. Hill quotes from a recent book, Now You See It by Cathy Davidson: “65 percent of children entering grade school this year (2011) will end up working in careers that haven’t even been invented yet.”

What do you think?

Is insurance work vulnerable to the economic pressures?  Are you seeing the drivers of this new work in your organization?  What are the repercussions?

Editor’s Note:  Customer driven changes in the insurance environment over the next 3-7 years will be the overarching theme at the 2016 Insurance-Canada Executive Forum on August 30, 2016, in Toronto.

2 Comments

Dexter

I think today an increasing number of workers are veering off the time-honored career path of joining an employer, rising through the ranks and staying for decades. Some are freelancing by choice, relishing the opportunity to set their own schedules, choose their assignments and work independently. Others have turned to contingent work out of economic necessity.

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Georgina Cumber

As a freelancer, I found it challenging to find insurance as there weren’t a lot of providers that were able to cater to someone working within the “gig economy.” After quite a search, I was able to come across Elite Private Wealth.
I would highly recommend this company for people in the gig economy. http://eliteprivatewealth.com/insurance/life-insurance/

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