Health Insurance: Expert decodes how it is now an essential service for gig workers

As per a report by ASSOCHAM, India’s gig sector is expected to increase to US$455 billion at a CAGR of 17% by 2024 and has the potential to expand at least 2x the pre-pandemic estimates. In another estimate, India is likely to have 350 million gig jobs by 2025, presenting a huge opportunity for job seekers to capitalise and adapt to the changing work dynamics. At present, India has a pool of ~15 million freelance workers staffed in projects across IT, HR and designing. In addition, India’s workforce is growing by ~4 million people annually. And as most of them are young millennials, they are showing an increasing preference for gig contracts. This trend is expected to significantly impact the gig economy in the near future.  Abhishek Poddar, Co-founder and CEO of Plum, shares his knowledge, on health Insurance and explains how it is now an essential service for gig workers:-

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The New Labour Code:

"India has recently witnessed a stretch of labour sector reforms with four brand new codes subsuming 29 Central labour laws – some of them being century old laws. The four labour codes – Code on Wages 2019, Code on Social Security 2020, Industrial Relations Code 2020 and Occupational Safety, Health and Working Conditions Code 2020 together provide a simplified labour law regime benefitting both employees and employers. The new labour codes also provide a much-needed recognition to ‘gig workers’ and ‘platform workers’. The new Labour Codes of 2019 defines a gig worker as “a person who performs work or participates in a work arrangement and earns from such activities outside of the traditional employer-employee relationship. The Code on Social Security 2020 for the first time extends social security benefits like maternity leave, disability insurance, gratuity, health insurance, old age protection to the workers in the country’s flourishing gig economy space," says Abhishek Poddar.

Explaining four reasons why health Insurance is now an ‘Essential Service’ for Gig Workers, Poddar said, "The law now recognises ‘Gig Workers’: The current labor laws do not have any provisions for insurance benefits to be provided to gig workers in India. However, the Code on Social Security, 2020 (“Code”) which is yet to be implemented in India, provides that gig workers will be able to get social security cover under the Employee State Insurance Scheme. Further, the Central Government may frame suitable social security schemes for gig workers on matters relating to inter alia accident insurance, health benefits and any other benefit as determined by the Central Government. It is pertinent to note that these schemes may be wholly funded by contributions of the aggregators (as specified in the Seventh Schedule of the Code) of a rate not less than 1% of the annual turnover of every such aggregator. These aggregators include ride sharing services, food and grocery delivery services, logistic services etc."

He adds, "According to Ashima Obhan, Partner Obhan and Associates, “Traditionally, gig workers were not recognized as “employees” and the benefits that were par for course for employees, were not extended to them. The new labour codes have turned that concept on its head. Under these new codes, gig workers are entitled to insurance benefits. While the date for implementation of these codes is yet to be announced, organizations are working towards ensuring compliance with the new codes.”

The Platform economy is growing:

"The rise of the platform economy has drastically impacted the labour market globally and in India. Self-employment, freelancer work and the gig economy is rising and will continue to. In a tight-labour market, any company that is serious about scaling has to provide compelling benefits and security to its staff. Insurance is therefore the most essential security to provide. Recently, a public interest litigation (The Indian Federation of App Based Transport Workers (IFAT) v. Union of India) was filed in the Supreme Court of India in September 2021, for the extension of social security legislation to gig workers and app-based workers. This is an important step to protect their rights and prevent exploitation," he further added.

Technology and remote work are likely to create many more ‘Gig workers’

"As per a KPMG report, the current cutting-edge digital online platforms, along with the proliferation of mobile applications, have paved the way for the gig economy by enabling an instantaneous matching of supply and demand, bringing together service providers with people needing those services. Fundamentally, there are many kinds of gig digital platforms: the labor based ones, which enable workers to provide activities, completing tasks like driving a car (e.g. Uber), delivering parcels and food (e.g. Swiggy/ Zomato), aggregator platforms for gig and blue collar work (Apna), task based platforms for gig workers (Fiverr) and many more. The gig economy is also a B2B market, highlighting transactions between different sectors and the need for new insurance products,"  he explained.

It is the right thing to do:

"Over 80% of Indians do not have a health cover, according to the 75th National Sample Survey. Among rural Indians, 85.9 percent don’t have any health expenditure coverage. In the case of urban Indians, it is marginally better at 80.9 per cent. Medical expenditure for hospitalisation, according to this survey, is a significant one. On an average, a rural household spends Rs 16,676 annually while it is Rs 26,475 for an urban Indian. In the absence of health insurance coverage and high expenditure, Indians are digging into their savings or borrowings to bear household medical care bills. In rural areas, 80 per cent households depended on savings to fund medical expenditure while 13 per cent people borrowed from various sources. In urban areas, 84 percent of people depended on their savings and income while nine percent borrowed to pay for medical expenditure," he opined.

"To sum up, gig work is here to stay. The faster we recognise this new form of work and provide for new-age benefits, insurance being the most essential, the faster our progress as an economy."

2022 prospects for Insurtech:

"Going forward, in 2022, like fintech, InsurTech is also focusing towards making the entire process of issuing an insurance policy and its claim, swift and easy for end users. The industry is all set and increasingly shifting online and becoming mobile-first. The pandemic made people more conscious towards their health and wellbeing. People realised the value of insurance policies. It pushed many insurance companies to adopt digital channels to reach out to the end users. Many companies/ employees have become aware of the benefits of insurance and are taking up various types of covers for COVID19, hospitalisations, home treatment and comorbidities. Group Health Insurance is back under the spotlight yet again, with the new variant we are seeing an upsurge in insurance demand," he concluded.

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