Emerging Industries Will Threaten Insurance Norms in 2021

Frank Pennachio has more than 30 years of experience in the insurance industry as an agency owner and producer. In 2009, he sold his agency and co-founded Oceanus Partners, a ReSource Pro company. He is now a full-time trainer and consultant to insurance organizations.

Autonomous vehicles and the gig economy are already impacting insurance agencies

The future of work and technology may be exciting, but for insurance agencies, new changes in the way our economy functions could shake up books of business.

What happens when self-driving vehicles become more common?

Self-driving vehicles been roaming our streets for years now, albeit in small numbers and usually under the supervision of backup safety driver. Now, some optimistic companies like Waymo, which has operated an autonomous taxi service in Phoenix, Arizona since 2017, say that fully driverless rides aren’t far off.

According to the National Highway Traffic Safety Administration, 94% of crashes are the result of human error. By replacing drivers with robots, roads will become significantly safer, even if driverless vehicles do not replace human drivers altogether. Personal auto premiums will likely erode as the technology becomes more prevalent. And while accidents and injuries will still occur with automated vehicles, the blame may fall with vehicle manufacturers rather than car owners.

What happens as the gig economy grows?

Names like Uber, Lyft, and Doordash have become household in many urban areas, and according to a 2017 Upwork study, gig workers will outnumber employees by 2027. Whether that happens or not, gig workers will no doubt expand in number, creating another dilemma for agencies.

The rise of the gig economy, in which freelance workers use platforms like Uber, Fiverr, and others to discover and work with clients, has ushered in a growing problem for both workers and insurance companies. As more people turn to freelance work for income, less receive the benefits that ordinary full-time employees do. For insurance companies, that means eroding group health premiums, commissions, and overall revenue. And while gig workers will continue to purchase insurance, they will likely leave agencies out of the loop, instead opting to purchase directly from insurers online.

Final considerations

The autonomous vehicle and gig industries aren’t going away any time soon. To stay afloat in the face of these economic and technological changes, insurance agencies may need to seek out larger and more complex accounts.

The future isn’t entirely certain though. There are many other considerations to keep in mind moving forward. For example, Proposition 22, which maintains app-based drivers as independent contractors, was recently approved in California after a multi-million dollar campaign by companies including Uber and Lyft. However, the debate over whether gig workers should be considered employees or contractors will likely continue, and future legislation could still impact the insurance industry. At the same time, automation technology could also collide with the gig economy as rideshare companies develop and test-drive their own autonomous technology.

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