Insurance requirements are standing in the way of organizational agility. It’s time someone did something about it.
In today’s business environment, leaders are continually asked to “do more with less”. This dichotomy, in addition to other contributing factors, has led business unit and HR leaders to reach beyond a traditional employee workforce, fueling the adoption of independent contractors and corp.-to-corp. engagements.
Through my experiences working with staffing providers, I’ve witnessed how attracting and onboarding independent professionals is accompanied by insurance requirement and compliance headaches. Often, talent must go to extremes to meet requirements to agree to a contract, causing apprehension, prolonged onboarding times and even project rejection.
Excessive Insurance Requirements
“Based on my experience in the onboarding process, 1 out of every 4 independent contractors will not accept a contract for a job they are qualified because the insurance requirements are too high,” explained Dylin Holden, an insurance advisor at Bunker. “The most common policies that frustrate independent professionals are cyber, crime and umbrella insurance policies, which also carry high limits,” Dylin continued.
With excessive insurance requirements come high premiums for independent contractors to pay. For example, it’s not uncommon for an independent contractor to face a $10,000 premium to be eligible for a four-month contract. With these barriers, not only might the organization lose talented professionals, but they risk paying more for the same project – the worker increases their bill rate to account for the additional insurance premium to make the contract worthwhile.
What needs to change? Enterprises need to reevaluate their insurance requirements, separate those for large organizations and contractors/SMBs or based on total-contract value.
Big Data, New Products & The Rise Of Transparency
Historically, the insurance requirement and purchase process has been very opaque. Today, insurtech companies, like Bunker, are on a mission to bring transparency to enterprises, staffing firms and independent professionals and reduce the barriers of business relationships. Leveraging insurance requirement data created and shared on the Bunker platform, we’ve created a free insurance requirement assessment tool. Users can input their requirements and the tool will compare them to Bunker’s database, providing an industry comparison by coverage and limit, highlighting potential barriers for supplier/contractor relationships (results are emailed within two business days).
“In working with enterprises and their contingent workforce, we see first-hand how insurance slows the onboarding process and can halt projects,” recalls Jarret Gardner, Vice President of Business Development, Sales Strategy & Strategic Partnerships at nextSource. “Leveraging Bunker’s insurance data gives us valuable information when building out programs to proactively mitigate those roadblocks.”
The insurance requirement assessment is one way to ensure your organization is requesting reasonable insurance and obtaining talent at the best possible price.
To reduce insurance barriers further, new products must be built to suite the flexible business relationships in today’s economy. Usage-Based Business Insurance, an “only pay for what you use” concept that originated in auto insurance, is a perfect place to start. As the first insurance company to apply this concept to commercial space, these new products allow professionals to purchase insurance with unique terms to match their contract. This means contractors and suppliers can purchase insurance for the duration of their contract (i.e. number of months) and limit the scope (i.e. number of clients covered), which saves them money and accommodates the growing gig economy.
“Bunker has created the first usage-based insurance product exclusively for independent contractors,” Jarret details. “These types of products will not only provide a better, faster onboarding experience for customers but will also open doors to a new stream of talent,” he concludes.
As business leaders require more agile staffing needs, ecosystem providers must be focused on reducing barriers to support the future of work. There’s a long road ahead, but with a little elbow grease and a lot of transparency, we’ll get there together.