Insurers traditionally didn’t cover more than one income stream under their income protection products. Picture: iStock
- People with multiple-income jobs and other side hustles can now insure all their incomes – but not for lockdown losses just yet.
- Life insurer FMI is extending its cover to these individuals who weren’t traditionally covered by insurers, including Uber drivers, tattoo artists, entertainers, and other gig economy participants.
- Income protector products still cover them in the event of illness, injuries and disability not related to Covid-19.
Life insurer FMI has announced that it will extend its income protection cover to Uber drivers, freelancers, tattoo artists, and most people holding down multiple jobs.
As the Covid-19 pandemic exposed how vulnerable income streams of people not employed on full-time basis could be, the insurer said people with “unorthodox” occupations, and those who earn their living from multiple sources, needed to be brought into the safety net.
Last year, insurance group Liberty also announced that it would be covering people for their side hustles.
As it became apparent during the current pandemic that people’s incomes aren’t only at risk when they get ill, injured or become disabled, FMI said its cover would also apply to loss of income due to these traditionally claimable events.
Elmarie Samuel, senior technical marketing specialist at FMI, said the insurer has paid out a number of income protection claims to individuals who have been diagnosed with Covid-19.
However, around the globe, millions of people have lost their incomes not because they are ill but as a result of retrenchments, lay-offs and salary cuts.
Many companies and small businesses have battled to keep up with staffing costs as they are generating a fraction of the revenue they used to before the pandemic.
Freelancers and commission earners have been hit hard, as many didn’t qualify for relief government provided under the Unemployment Insurance Fund.
In SA, the lockdown, which is now in its fifth month, has brought the tourism, hospitality and tobacco sectors to a near standstill, and many workers in those industries are without any income.
However, for now, the pandemic is largely only being covered when it comes to clients being diagnosed with the virus – this in the case of life insurers. In the case of short-term insurers, they argue that loss of income caused by the lockdown constitute economic losses and not insured losses.
While income protection products have not yet been underwritten for these economic losses, Nick Smit, FMI head of product and pricing, said Covid-19 has kickstarted changes that the industry has been too slow to implement. Covering “unorthodox” occupations being one of those changes, he said.
“It’s hard to ignore evidence before us that the number of people who are working like this is increasing,” he said about contractors, freelancers and people employed in the gig economy, who had no sick leave to fall back on when diagnosed with Covid-19.
To underwrite these individuals, the company said it will look at their average earnings in each occupation or income stream over the last 12 months.
“Traditional insurance models do not sufficiently cater for these individuals, who are often not working consistently, have no formal contracts in place, or are unable to define what their anticipated income will be at any given point.
“But this doesn’t change the fact that someone working in the gig economy has as much of a need to protect their income as someone who is formally employed,” added Samuel.
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