Whether by necessity or choice, many Americans are turning to some form of independent work and the insurance industry is trying to keep up. New and established companies are offering new products and more streamlined ways to purchase them in a bid to cater to the side hustlers and the self-employed.

“The industry is getting wiser to what it is,” says Will Infantine, managing director of the Manchester office of King Insurance. “And they’re coming up with better insurance solutions for these individuals.” 

While contract work is nothing new (indeed, the term freelance emerged in the 1800s as a description of medieval mercenaries), it’s a rising segment of the U.S. economy. 

In 2023, the Census Bureau counted 30.4 million so-called “non-employer establishments”—a category that includes everyone from Uber drivers to gig musicians to one-person consulting shops to independent landscapers to freelance writers who need everything from liability coverage to health insurance. That’s up from 23 million a decade earlier. In NH, more than 116,000 such ventures generated an estimated $8.4 billion in revenue in 2023. 

Insurance companies are eager to tap into that customer base, says Jon Gray, the director of benefits and member services at the Freelancers Union, a national organization that advocates for independent workers and offers benefits like insurance.

“They’re trying to figure out a way to get into this market,” he says. “Because freelancing is the way of the future.”

Covering liability

Infantine says the biggest change he’s seen is that it’s become easier for independent professionals and businesspeople to buy affordable liability coverage. 

“That’s kind of the first thing that we started seeing and that’s occurred in the industry—finding a simple, online, cheap type of liability policy that takes into account what the people are actually doing,” he says.

New companies like Next Insurance and brands launched by established players, like Berkshire Hathaway’s BiBERK, advertise low-cost coverage that can be obtained within minutes after a few basic questions about the nature of the business. 

Infantine says the proliferation of new, often niche freelance roles has required the industry to adapt. Companies are used to underwriting, for example, a plumber. But how do you assess risk for a content creator or an independent consultant who tells workplaces how to be ergonomic?

“What these insurance companies have done is say, ‘Look, this is simple. We can’t underwrite it too much,’” he says. They might ask a few general questions like the industry someone’s in and whether they work from home or visit worksites, which is enough to come up with a price that reflects the risk of injury or property damage.

Convenience and flexibility are key selling points for solo entrepreneurs, says Mary Duggan Hoeprich, the founder of Gild Insurance Agency, an online agency that focuses on serving freelancers and small businesses. They might be up before dawn, working on their side business before heading to a 9-to-5.

“There are a lot of industries and a lot of small business owners that are very attracted to being able to go online (to) secure their own insurance very quickly,” she says. “They know what they need. Like a contractor or a freelancer who’s been working on their own for quite some time and understands their risks and what the requirements are going to be.”

One online company, Thimble, even advertises coverage “by the job, month or year” that can be instantly paused, canceled or modified when business slows or picks up. But Hoeprich hasn’t seen that kind of “on-demand” coverage catch on widely in part, she thinks, because insurers generally have become smarter about how to underwrite and price products for a wide range of nontraditional gigs and business ventures.

“The insurance industry, especially in small business, has really come a long way in the last few years of embracing technologies and new products,” she says. “There’s a lot of new ‘insurtechs,’ even some carriers that have expanded their offerings, to be able to provide more tailored and priced-right products for what is needed by someone who is using this as a second job.” 

For example, Gild saw a need for more customized insurance offerings for professionals like massage therapists, estheticians and tattoo artists, who work closely with clients in a studio space and whose income tends to come from relatively small-dollar transactions.

The agency partnered with Blitz Insurance to create a product that allows health and wellness professionals to bundle things like general liability, professional liability, property, and sexual abuse and molestation coverage (which covers legal costs in the event of a claim of inappropriate behavior), at varying price points.

Landon Reid, the chief distribution officer at Blitz, says the goal was to account for the specific risks and contractual obligations those professionals face, while offering flexible pricing and coverage limits.

“You have to have pricing that starts at a lower minimum than you would for a traditional annual policy,” Reid says, citing the example of a massage therapist who’s just starting out and has limited revenue. “Your appetite for a $500 policy is not going to be as high as it would be for a $200 policy that gives you the same terms and conditions, more flexibility on what you want to do, that you can grow into a larger, more robust policy as you grow your client set.”

Getting W2 benefits

For full-time freelancers, finding affordable health insurance and other benefits typically associated with W2 employment can be another challenge. Professional associations are trying to fill some of those gaps. The Freelancers Union, for instance, partners with insurance companies to offer access to benefits like health, disability and life insurance. 

One of those companies, Opolis, is a member-owned platform that allows freelancers to become W2 employees while preserving their independence. By forming a corporate S-Corp entity and making Opolis their employer of record, freelancers can gain access to benefits like group health insurance, a 401K and pay stubs, and W2s to use as proof of income. 

“It’s a really good option for the more successful freelancer because when you go for a mortgage or you go for an apartment, you’ll have a W2 instead of having to scrape together bank statements or 1099s,” Gray says.

It’s no surprise insurers are looking for ways to serve freelancers and solo entrepreneurs, Infantine says. After all, someone who starts a side business from their kitchen today might have a dozen employees after two years. “Hopefully they’ll remember that insurance company that helped them out,” he says, “and then they’ll stay with that insurance company and do business with them when they grow — and maybe become the next Apple, you know?”

These articles are being shared by partners in The Granite State News Collaborative. For more information, visit collaborativenh.org.