In November, Zurich and the Smith School at the University of Oxford announced the launch of Agile Protection - a campaign to explore the potential for new protection solutions to meet the needs of an evolving 21st century workforce.
We see the world of work undergoing fundamental change, largely driven by technological advance.
While there will be challenging impacts, digitalisation should be seen as an opportunity to empower, not replace people – offering greater career flexibility and autonomy.
As an insurer, we know that grasping an opportunity also means identifying – and addressing – the associated risks. Social protection systems are, therefore, a key consideration when it comes to the future of work.
Are these systems fit to cover financial shocks in future? We believe current systems are fragile, leaving workers vulnerable. Rethinking them should be a priority for all stakeholders including employers, individuals, governments and advisers.
As a first step, it is worth looking at changing work patterns. Driven by technology and buoyed by the deregulation of labour markets, the global workforce has experienced a sharp rise in non-standard employment.
The UK’s self-employment boom, for example, includes a 100 per cent rise within the advertising industry since 2009. Studies show many workers value the autonomy, challenges, business opportunities, and extra income which self-employment can offer. Younger workers especially value greater work-life balance.
However, today’s social protection continues to largely focus on traditional, full-time work.
Employment laws secure employer funding of benefits like sick pay, holiday pay, pensions and parental leave for anyone on a permanent contract. This does not cover other workers, who often receive little or no benefit, not to mention financial advice or guidance.
For many well-educated and well-skilled self-employed, the risk is not unawareness of this status, but misperceiving the risks involved.
Zurich's previous project with the Smith School looked at income protection gaps (IPGs) - the difference between what you earned and what you were covered for in the event of disability, chronic illness, or death in a household.
It found 50 per cent of Europeans foresaw their chances of becoming disabled or chronically ill as less than 10 per cent – the reality in the EU is about 25 per cent. This will rise as working populations continue to age.
Those still in traditional work will also be vulnerable.
As digitalisation creates new skills requirements, workers will tend to switch employers more often – including across geographies – and they will also pause to retrain.
This is curtailing the ‘one-job career’ model. The average worker in the UK now changes job every five years.
The trend appears likely to increase – statistics show US millennials stay under three years in a job. As yet, frameworks around pension and benefits schemes do not support this new reality.
Some risks for workers have been present for some time but will be amplified in future.
One example is mental health. This has been steadily rising as a concern in OECD countries and already costs UK business £42bn per year.