In the good old days, the point where work ended and leisure began was obvious. Home and office were clearly defined spaces, and uniforms, working hours and management structures all helped to reinforce these boundaries. But those days have gone and in their place stands a more fluid working culture, where play can be work, home can be the office, and for many workers the boss is the man or woman in the mirror.
According to the 2015 Labour Force Survey, there are 1.9 million freelancers in the UK currently, accounting for 6% of the workforce. This includes those people whose only work is freelance and those who supplement their primary role by doing freelance work on the side. Their professions run the gamut from IT and management consultants, to creative and tech professionals, to self-employed workers in the new on-demand economy.
Although all freelancers are different, most at the very least need public liability cover against being sued for injuring a third party or their property, or professional indemnity cover to protect against claims that negligent advice has been given, to help survive costly lawsuits they cannot afford to fight. But while some buy insurance as a matter of course - sometimes due to contractual obligations - others are less aware of their risks, or do not believe appropriate protection is available.
PI cover has long been a routine buy for freelance architects, engineers and surveyors, who recognise the threat of a negligence claim. But in recent years, Kerri-Ann Hockley, head of customer service at broker Policybee, has seen increased interest from freelance and contract workers in less recognised professions, seeking cover suitable for their work.
These include energy assessors, Know Your Customer consultants employed by banks to gain information on potential loan or mortgage customers, and complaints handlers for payment protection insurance, also employed by banks to settle cases in the wake of the 2008 PPI mis-selling scandal.
Seasons of work
What all these have in common is that their work comes in blocks of a few months, which are followed by a change in employer, or a period of unemployment, making an annual policy undesirable.
A key feature these workers are looking for is flexibility, and some insurers have adapted well to this demand, Hockley says. "Most insurers we work with offer an interest-free direct debit option and you only pay for the time that you're on cover. It's not like an annual policy where you pay for 12 months and it can't be cancelled."
One complication has been the fact that this cover is traditionally written on a claims-made basis, meaning the insured must have the policy in place when they did the work and when the claim is made against them. However, insurers have started to recognise that PI written on this basis does not work for contractors who may make an error that does not come to light until several months down line, Hockley says.
"What one or two of our insurers have done in conjunction with us is created something called policy hibernation. When you're contracting, you have your full active policy. When you're not contracting, we hibernate your policy for a few months but you still maintain cover for the past work you did in that time and for the luxury of having your past work covered, you just pay half the premium you would have paid."
While increasing numbers of workers are employed in less secure or short-term positions, work is also being carried out in a more diverse range of locations. Along with traditional office places, with whole floors or buildings rented out by one organisation, and the home office, the last five years has seen the emergence of the "co-working space" - the favourite home of tech start-ups - where small businesses can rent part of an office and enjoy communal facilities.
London alone is now home to more than 150 co-working spaces, and since companies often seek out this kind of arrangement because of the flexibility and freedom it brings, they want property insurance that is equally flexible, says Ben Rose, director at Digital Risks, a broker for digital native companies.
"With most co-working spaces you can pay a month's deposit and a month's rent [in advance] and you can exit the agreement with one month's notice as well. Whereas in the past companies had to sign a five-year lease and pay a massive deposit and massive rates, if you work in a co-working space today, you can say I'm going to pay one month's rent and one month's deposit and if next month I run out of money, or my team has grown from two people to 20, we can move into a new space," he explains.
If people are able to leave a co-working space with one month's notice, they don't want to commit to an annual premium, which is why some brokers offer cover on a monthly subscription basis, says Rose.
Using a co-working space effectively involves sharing your office with strangers, which has proved a stumbling block for some firms trying to obtain property insurance.
"Typically insurance policies contain a warranty where you're asked to confirm that the portion of the office that you occupy can be separately locked to prevent access," Rose notes. "So if you're a company and you're in a workspace where you can't lock the door to prevent people access, then the policy is not valid. Customers have come to us and said: ‘I had my insurance with X, Y or Z insurer and [it] declined to pay the claim because we've not met this condition'," he says.
In response to this, Digital Risks has worked with insurers to develop co-working friendly cover that removes this requirement. "We've tailored the policy to say that if you're not in a private office that you can lock, then [you must] put your laptop in a drawer or in a locker, and if you have a desktop computer, attach it to the desk by a Kensington lock or something similar. As long as there is some kind of forceful access to the equipment, then it will be covered under the policy."
Trying to develop cover that is appropriate for freelancers but still demands sensible risk management has been essential, Rose says. "The main thing an underwriter is trying to avoid is people leaving their laptop on their desk at lunchtime, coming back and someone within the same office has walked away with it. That's not something that it's fair that an underwriter should have to pay. It's about taking reasonable steps. You wouldn't leave your laptop unattended on a train or library, so you shouldn't do it in a co-working space."
More traditional lines
While new professions have necessitated new cover, the insurance needs those working in more old-school freelance lines of work have not remained static, says Mike McCormack, a director at broker Hencilla Canworth, which works predominantly with freelancers involved in film, theatre and live events.
According to McCormack, workers are now much more frequently expected to come to a job with their own insurance in place. "There seems to be a trend, particularly in live events, either by the producer or organiser, to try and delegate responsibility down the chain to the freelancers, so the freelancers have to come equipped with their PL cover and sometimes PI. If there's any incident, then they're looking to the freelancer's liability insurance for that. If I go back 15 years, that was never the case. People were all covered as employees, even if they weren't, and the production insurance took precedence."
While such demands raise awareness of the need for insurance, it means many freelancers view it as a tick-box exercise, rather than something that can protect the viability of their enterprise. "It's virtually entirely contractual," McCormack says. "It's a condition of their employment that they have to carry PL insurance. Awareness is being driven through that because when you go to the next job, you know you need to have it."
While insurers may not be doing a great job of selling the benefits of insurance to freelancers in more established professions, when it comes to those working in new digital roles, this gulf can be even wider, according to Ashley Baxter, director of recently launched freelance insurance website Jack.
With a background in freelancing and web design, she felt freelancers were being neglected and decided to "build a business that bridged the gap between insurance and freelancing".
Knowing your risk
Diagnosing what she sees as the key drivers of underinsurance among freelancers, she says not enough insurers are creating cover specifically for freelancers, and too many are trying to be generalists rather than focusing on specific niches.
"Some freelancers go to price comparison sites to get their insurance, where they're filling in a form that offers insurance for a wide array of businesses. As a result they are asked a lot of confusing questions that aren't applicable to what they do. That makes them doubt whether the insurer even covers what they do or understands what they do," she says.
"Consumers want their insurance company to understand them. To speak their language. You'll often see insurers using a tradesman as an example, to explain what PL insurance is. But if [you're] a freelance writer and sit behind a computer all day and deal with [your] clients remotely, how is that applicable?"
"The big obstacle for freelancers is that they need to understand insurance better. But that's not their problem. Freelancers can only understand insurance better if insurers are putting out relevant content that educates freelancers about insurance, speaks to them in their language and uses examples that are applicable to freelancing."
While contractors and freelancers have existed in some form for decades, one development that was unimaginable 20 years ago is the sheer number of people employed by app-based companies in the sharing economy. The birth of the smartphone has seen the creation of hundreds of platforms allowing drivers to work flexibly using their own vehicles either as taxis or for deliveries, homeowners to rent out their properties for extra income, and much more besides. The failure of traditional insurers to get to grips with these workers has led to the development of start-ups specifically targeting them.
UK start-up Tego, launched this year by two former Deliveroo employees, focuses specifically on scooter-riding food delivery drivers, and allows drivers to purchase pay-as-you go cover to protect them when they are undertaking activities outside the social, domestic and pleasure use that their standard policy covers. Meanwhile, US start-up Slice recently launched the first on-demand cover for home-share hosts using platforms like Airbnb.
Explaining why the Slice team decided to launch, CEO Tim Attia says: "On-demand workers can be a person one minute and a business the next. Traditional insurance carriers and policies have not addressed this, due to their restrictions and exclusions about individuals using their home, car or tools for business purposes, or providing personal services. So these individuals do not have the safeguards that a traditional business does when they're in fact operating as a business in this on-demand economy."
The failure to take up cover can leave homeowners or drivers highly exposed, he adds: "Without proper protection, if an accident happened while hosting guests in your home or carrying passengers in your car, the damages could easily exceed $1m (£815,000).
Attia continues: "Generally, most workers in the on-demand economy are unaware of the protection gaps and risks they face until it's too late. However, we've talked to many workers in the on-demand economy who are aware of their risk and are in search of proper protection. This is partly due to individuals doing their research and partly due to the media filling headlines every day with sharing economy stories gone wrong."
While freelancers and workers in the sharing economy will bear the brunt of being inadequately protected, if insurers fail to adapt to the needs of these workers they will be missing out on a sizable market. But being able to convert these workers into customers is not only a marketing challenge, but a challenge to the way insurers view and assess risks.
"Insurance companies like the comfort of using large amounts of data to predict risk and how exposure to these risks will impact their business. Traditional markets have this; emerging markets do not," says Natalie Albert, commercial director at schemes broker Caunce O'Hara.
"It can be difficult to put a premium on a sector which provides no historical information and as an industry we are venturing into the unknown," she says. Nevertheless, it is "crucial that insurers deliver suitable products for emerging sectors".
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