How Changing Work Patterns Drive Demand for Hybrid Small Business Policies

Remote work, telecommuting and gig work have been on the rise for years. Developments surrounding the spread of the novel coronavirus have not created the trend but simply accelerated the pace at which workers transition from an external workplace to an at-home workspace.

As work patterns change, so do workers’ needs when it comes to insurance. Although many people are now working from home, their personal insurance coverage may be insufficient to meet their needs if a loss occurs. Likewise, insurance focused on business spaces may not address problems that arise outside of that specific context, even if those issues are work-related.

The way we work is changing. So are customers’ insurance needs.

The World is Our Workplace: When, Where and How We Work

For most U.S. workers, the option to work remotely isn’t merely nice. It’s essential.

A 2019 study by IWG found that 74 percent of respondents saw flexible work arrangements as typical, even expected. Eighty percent of respondents said they’d go so far as to turn down a job offer if the company didn’t offer the option of working remotely or telecommuting.

“Flexible working is considered by many to be the new norm for any business that is serious about productivity, agility and winning the war for top talent,” says Mark Dixon, CEO of IWG.

This “new norm” has arisen as telecommuting and remote work become increasingly common. According to a FlexJobs and Global Workplace Analytics report, the number of non-self-employed workers who worked from home at least 50 percent of the time grew 115 percent between 2005 and 2017, to 3.9 million.

Many companies are committed to expanding their work from home offerings as well. Dell, for example, set a company goal to have a 50 percent remote workforce by 2020, writes Sara Sutton, CEO and founder of FlexJobs. Even companies without such ambitious goals have embraced the value of allowing workers to do their jobs in places outside the business premises.

For most workers, work remains a blend between time spent in a dedicated business space and time spent working remotely, telecommuting or participating in one or more side gigs.

“It’s important to note that full-time and even half-time telecommuters are among the minority. A far larger portion of the workforce, about half, works from home at least once a month,” says Kate Lister, president of Global Workforce Analytics.

In other words, it’s possible to draw a distinction between business and personal activities for these workers at certain times, but not at others.

Rebalancing Risk in a Remote-Work World

For centuries, insurance companies have benefited from the relative clarity of separating work and personal activity. People worked at a business office or other work site, and they carried out their personal affairs at home or in other venues.

Today, however, both worker demand and business interest in the benefits of remote work have blurred those lines, requiring recalculation of risk.

Who Hires Remote or Gig Workers?

Small businesses remain a vital customer base for the expansion of hybrid policies. Not only do many small business owners work from home themselves, they’re more likely to hire full-time remote workers than larger companies are, says Dragomir Simovic at Small Biz Genius.

A study by OWL Labs found that small businesses were twice as likely to hire remote workers as larger businesses. When these companies hire workers who carry out employment-related tasks, but who don’t work on a defined business premises, questions about whose coverage applies and how in the case of an accident can be complex.

What are the Risks of Remote Work?

Evidence indicates that working from home may actually pose fewer risks from an insurance perspective. For example, a 2013 study of work from home productivity among call center employees found that those who worked at home completed 4 percent more calls per shift, an increase attributed to the fact that homes were generally quieter than workplaces, write Nicholas A. Bloom and fellow researchers. Fewer distractions allow for better focus, which may reduce the risk of accidents caused by a lapse in attention.

Workers who typically do knowledge-based work or work that requires deep thinking tend to do well in a remote environment due to the lack of distractions, according to a 2019 study published in the Journal of Business and Psychology. For insurers, a low-distraction environment suitable for deep-thinking work may also pose fewer risks.

Remote work may have its downsides as well, however. For example, “isolation, anxiety, and depression are significant problems when working remotely, and we must figure out ways and systems to resolve these complex issues,” says Amir Salihefendic, founder and CEO of productivity software provider Doist. These problems may be exacerbated by attempting to turn the wrong kinds of work into remote positions.

To address problems caused by isolation, some workers turn to remote, shared work spaces. These have contributed to recent increases in the overall number of remote workers, notes Samantha Lambert, director of human resources at digital agency Blue Fountain Media. Yet these shared office spaces can create risks as well, and when a loss occurs, determining whether and to what extent various coverages apply can be difficult.

Ultimately, remote work won’t be the right answer for every worker. “It’s not so much that telecommuting is good or bad; it’s just that sometimes it’s advantageous and sometimes it’s not,” says Ravi Gajendran, a professor at Florida International University.

Auto Coverage Offers a Place to Start

One stated benefit of remote work, telecommuting or freelance gig-type work, is that it allows many workers to skip their daily commute entirely. That saves money and helps lessen environmental damage by saving “9 to 14 billion kilowatt-hours of energy each year” according to the Consumer Electronics Association, writes Patrick Russell, director of product marketing at SaaS business communications provider 8x8.

Keeping those workers off the roads also reduces their risk for car accidents, which benefits both them and their insurance companies. Furthermore, auto insurance offers a place to start crafting and promoting hybrid policies, since work in this area is already underway.

The rise of rideshare insurance offers a clear example of insurance company adaptation to ambiguities in the personal-business use divide. When rideshare companies like Lyft and Uber first started, personal auto insurance policies didn’t cover drivers while they were transporting passengers, and rideshare companies only had limited coverage for specifically-defined phases of each trip, says Megan Glosson at Investopedia.

In response, many auto insurers hybridized auto coverage by offering rideshare policies. These policies address both the personal and commercial aspects of gig work through rideshare companies. Some are add-ons to existing personal auto insurance plans, while others are standalone plans that car owners can purchase. Both options offer the flexibility these gig workers need, while also addressing the unique constellation of risks that arises from using one vehicle for both personal and business purposes.

The work world nationwide has been trending toward mobile, flexible work arrangements for many years. With pandemic-related measures closing business premises and keeping more workers at home, traditional methods of providing P&C coverage by focusing on personal versus business use are ill-equipped to address the real-life situations of today’s workers. Hybrid policies, however, can help ensure that workers have the coverage they need when, where and how they need it.

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