As digital transforms the workforce, benefits providers and advisors must adapt their offerings.

Once upon a time, a typical office worker would don their professional attire for the weekday 9-to-5. After 40 years, they might retire from their lifelong employment with a gold watch and a comfortable pension. In contrast, today it is difficult to define the “typical” worker.

With the ability to carry multiple jobs from any location without firm hours (occasionally in their pyjamas!), the modern worker may only be tethered to an organization by digital devices, accessing software and data that lives in the cloud. They might have a friend or neighbor who picks up rideshare fares to cover tuition.

Technology is enabling this trend toward a “gig economy”.

According to an NPR poll, there are 32 million contract and freelance workers in the U.S., which is one in every five workers. They include computer programmers and accountants working through staffing agencies and Freelancer, Uber and Lyft drivers picking up fares through apps, and odd-job performers on Fiverr, TaskRabbit, and Amazon’s Mechanical Turk. By 2027, more than half the American workforce could be contract or freelance, according to an Edelman Intelligence study.

Globally, the sharing economy could be worth $335 billion by 2025, according to Lloyd’s. Such fundamental shifts in the workforce are challenging the traditional view of the workplace. The benefits industry must adapt to these changes.

The Gig Economy Impacts Benefits

Traditional worker benefits are acquired through one’s employer. An employee uses their employer-provided health coverage when they get sick and they contribute to their employer-matched retirement savings with every paycheck. When the workforce shifts to gig work, employers provide benefits to fewer workers, and the remaining workers no longer have benefits.

This leaves gig workers vulnerable. If they get sick or injured, they could find themselves unable to work with no safety net in place. Even worse, they may not be eligible for government-run social assistance such as unemployment benefits and pensions, and they could lose a gig suddenly with no severance pay.

“The protections that labor unions in the late 1800s and government-sponsored “social safety net” programs in the 1950s (UK National Health Service, 1948; U.S. Medicare, 1956) sought to stitch together, the sharing economy unravels.” — AIG

The U.S. Bureau of Labor Statistics found in 2015 that three percent of full-time workers had a non-fatal illness or injury, but an AIG survey discovered six percent of sharing economy workers had this experience. With twice the chance of an illness or injury that could prevent them from working, gig workers have an even greater need for health and disability insurance.

Gig Workers Can Find Protection

Worries over the loss of protection the gig economy entails are prompting calls for greater benefits portability and voluntary benefits. Some employers, such as SurveyMonkey, even started offering benefits to certain contract and freelance workers, which can help the company attract talent and stimulate a healthier, happier work environment. However, efforts like these could backfire if a court decides these contract workers are actually misclassified employees.

According to Richard R. Meneghello, Partner at Fisher Phillips, misclassifying workers opens a “Pandora’s box” for employers. “From a legal perspective, it’s not so easy to turn the workforce into contractors.”

Despite attempting to help their vulnerable contributors, these employers could open themselves up to tax liabilities, wrongful termination suits, and obligations for other workers’ rights. Uber has already faced court challenges to its workers’ independent contractor status.

One way gig workers can protect themselves is by purchasing their own health, disability, and life insurance along with making independent contributions to their retirement savings. This can be challenging, however, since they do not have access to the same group discounts and employer fund matching. It can also be difficult to pay for insurance monthly, or contribute to retirement savings, when relying on an unsteady income.

“The most prominent insurtech trend of 2019 will be the industry taking steps to catch up to the burgeoning gig economy. Existing insurance models don’t work well for independent contractors, which are projected to make up over half of the workforce within the coming decade.” — Chad Nitschke, Co-founder, Bunker

Benefits Providers and Advisors are in a Position to Help

This is where the benefits industry steps in. After all, if employer-provided benefits shrink, the gig economy is where potential benefits users will be.

In a Prudential survey, the most commonly-cited disadvantage for gig workers was the lack of benefits. Although some workers rely on benefits from their full-time job as they pursue supplemental income on the side, 70 percent of gig workers under the age of 35 have no access to benefits.

According to AIG’s survey, most gig economy workers are open to purchasing insurance to protect themselves on the job.

The challenge for benefits providers is to shift their outreach efforts to adapt to this new economy. One way to reach these entrepreneurs is to focus on trade organizations, like the New York-based Freelancers Union, local chambers of commerce, and co-working spaces such as WeWork. Grouping together for benefits also helps these gig workers access discounts, especially if they are older or have pre-existing medical conditions, or higher-risk occupations, that bump up their insurance cost.

With the trend toward more personalized benefits, providers must also customize insurance packages to suit these individuals. For example, older workers may be more concerned with retirement savings while younger workers are still struggling to pay off their student loans. Financial wellness benefits are desirable according to a PwC survey, and pet owners are seeking protection for their furry friends, driving a 6.8 percent annual growth in the one billion dollar pet insurance industry, according to IBISWorld.

Gig economy workers may need specialized insurance depending on their particular field. For example, liability insurance for a computer programming error or extra car insurance to cover Uber activities.

Advisors Play an Important Role as Educators

While some may seek out appropriate insurance to cover their gig activities, others may not even be aware of what insurance they need and just how important it is.

Take disability coverage for example. Younger workers feeling the invincibility of youth may not even consider that they could become unable to work. However, with gig workers twice as likely to experience an accident or illness, and the lack of employer support if they cannot work, this coverage is crucial.

“While disability coverage isn’t part of most traditional benefits packages, it’s a must for anyone in the gig economy. Nothing is more valuable than protecting yourself and your family financially when you’re recuperating from an illness or injury.” — Brian Greenberg, Founder, True Blue Life Insurance, Inc.

Similarly, life insurance is important for gig workers. When benefits advisors present disability insurance as a way to maintain current lifestyle, and life insurance as a way to protect families, along with information about accident statistics and risks, they can help workers find the coverage they need.

Brokers and advisors can also offer gig workers their expertise on other types of insurance they need but may have missed. For example, contract workers may not realize they could be responsible for liabilities – for example if there is an error in code or a typo in an advertisement, or if their laptop is stolen along with customer contact information. Advisors can use their expertise to help gig workers navigate these insurance complexities.

Some Organizations are Already Helping Gig Workers

While programmers and journalists may be able to save up a nest egg in case of emergency, some low-pay workers, such as domestic help, may find themselves more vulnerable. Google and others invested in the National Domestic Workers Alliance (NDWA) Labs portable benefits tool, Alia, to help protect this group.

Alia acts as an intermediary between workers, their clients, and insurance providers. Workers ask clients to contribute a small amount, such as $5 per house cleaning. The cleaners then use these funds to purchase disability, life, and other insurance as well as paid time off.

Another nonprofit, New York’s Black Car Fund, offers workers compensation and life insurance to professional limo driver members, including Lyft drivers. A surcharge added to each passenger’s fare funds the coverage.

“Either society tolerates the trade-offs of a more flexible work force—where it is sometimes unclear who pays the medical bills when a freelancer is injured, and where there is no such thing as “paid time off” for disability or bereavement—or a new social contract is constructed.” — AIG

Non-profit Freelancers Union offers its members peer-to-peer insurance via Trupo. Gig workers pool their money to cover sick pay during illness or injury recovery. “By joining Trupo, you’re not just insuring your own independence,” maintains CEO Sara Horowitz. “You’re joining the very community that’s building the next social safety net.”

Insurtechs are also targeting the gig economy. Stride Health’s platform enables Uber,, Postmates, Etsy, and other sharing economy workers to find appropriate health coverage.

While these non-profits and for-profits tackle the issue of gig worker benefits, lawmakers are weighing in as well. In some areas, politicians are pushing for greater worker protection and portable benefits.

“If we don’t have a social contract for this workforce, if we don’t have social insurance that moves with workers, then I feel like the economic discontent and economic insecurity that comes from working with no safety net under you would rise dramatically,” asserts American Senator Mark Warner.