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Income protection for ‘gig workers’ – finally!

Sep 10, 2020

By Elmarie Samuel, Senior Technical Marketing Specialist at life insurer FMI (a Division of Bidvest Life Ltd)

Income protection for gig workersSouth Africa’s gig economy is booming. More people than ever before are earning a living as so-called ‘gig workers’ – working as independent contractors, running a side hustle to make ends meet, or working in what some consider ‘unorthodox’ occupations. Until recently, though, when it came to income protection, many of them were seen as uninsurable.

According to Statistics SA’s latest employment outlook, nearly 4 million South Africans work as independent contractors, with temporary employment rising from 2.6 million in 2017 to 3.9 million in 2018. That number has probably risen even further since then.

While there are many advantages for gig workers and independent contractors, like greater independence and flexibility, there are risks too. For a ‘one-man band’, like a freelancer or contract worker, if you don’t work, you don’t earn – and the consequences of an injury or illness without the right cover in place would be devastating.

Old-school insurance models fall short

Traditional insurance models do not sufficiently cater for these individuals, who are often not working consistently, have no formal contracts in place, or are unable to define what their anticipated income will be at any given point. But this doesn’t change the fact that someone working in the gig economy has as much of a need to protect their income as someone who is formally employed.

The insurance industry as a whole has struggled to ensure customers with non-standard occupations and multiple income streams have appropriate cover available to them. FMI’s recent extension of its income protection to cover a wider range of occupations is a bold step towards achieving that goal.

We’ve done this by redefining the rules and procedures around occupation status – which refers to how you earn your income –  as opposed to your occupation, which refers to what you do for a living.

For example, your occupation could be accountant, but your occupation status could be any one of fulltime employee, freelancer or business owner.

Gig workers on the increase

In the past, most of our applicants were either fulltime employees or self employed, but we have seen an increase in applicants who don’t fit neatly into either of these two boxes. These include freelancers, independent contractors and those with multiple income streams.

We’ve been able to extend the number of occupations we cover because of how we classify the status of their occupation. This widens the range of people who can take out income protection to include those who choose to earn their income in a different way: independent contractors (fixed term, temporary and project based), secondary occupations (colloquially known as ‘side hustles’), and people who work intermittently or irregular hours.

Some examples of people who have struggled to get income protection cover in the past, who will now be able to enjoy cover, include:

  • Someone who works as a bookkeeper in the morning and drives an Uber in the afternoon. Previously, we were unable to cover them for the income they earned from driving. Now we can cover them for 100% of their income from both working as a bookkeeper and working as an Uber driver.
  • Someone who works as a farmer in the US for six months a year on fixed-term contracts. There are a growing number of people who work on fixed-term contracts intermittently, like those who work in the UK as caregivers for two months at a time. Our updated product will open up cover to these people as well.
  • An individual who tutors from their home for 12 hours a week, but does no other work. There are many South Africans today who don’t work for 45 hours, week in week out, who can now take out income protection.

The decision to expand our range of occupations eligible for cover, to include occupations which other insurers aren’t always able to protect, is in line with our core belief that everyone should be able to protect their income against the risk of injury, illness or death – the ‘Income First’ approach.

This post was sponsored by FMI.


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