Asian Businesses

What insurers need to know about the micro-business market

April 16, 2021
EHL.AI

More and more people are eschewing traditional jobs to start home-based companies or participate in the gig economy. Micro-businesses provide a wide variety of products and services, all operating as sole proprietorships or with few employees. Neither commercial nor personal insurance programs were traditionally designed to address these micro- businesses. Statistics reveal that 40% of all small businesses are uninsured; the figure rises to 60% for Home-based businesses. The gig economy is a large influencer of the micro-business marketplace. The proliferation of shared-platform technology will change the way they do business.

  • 80% of all U.S. businesses have no employees2
  • 69% of entrepreneurs start their business in their home3
  • About 50% of all firms are home-based4
  • Through shared kitchens, the food delivery market could grow from $35 billion to $365 billion by 2030.6
  • The U.S. Census Bureau reported U.S. e-commerce sales for the second quarter of 2019 totaled $146.2 billion (adjusted for seasonal variation), an increase of 4.2% from the first quarter.7
  • The Cake & Arrow report estimated that only about 18% of gig economy workers have insurance.8

https://www.verisk.com/insurance/visualize/what-insurers-need-to-know-about-the-micro-business-market/

  1. Eric Price-Glynn, “Re: MicroBOP article for Visualize,” e-mail on MarketStance data, addressed to John Luciano et al, February 12, 2020.
  2. U.S. Small Business Administration Office Of Advocacy, “Frequently Asked Questions About Small Business,” August 2018, https://www.sba.gov/sites/default/files/advocacy/Frequently-Asked-Questions-Small-Business-2018.pdf
  3. Jana Kasperkevic, “Study: Most U.S. Entrepreneurs Start Their Business at Home,” Inc., June 2013, https://www.inc.com/jana-kasperkevic/us-entrepreneurs-keep-businesses-close-to-home.html
  4. Ben Gran, “2018 Home-Based Business Statistics,” incfile, April 2018, https://www.incfile.com/blog/post/2018-u-s-home-based-business-statistics/
  5. Christina Gold Schmidt and Emily Smith, Insurance in the Age of the Gig Economy, Cake & Arrow white paper, December 2017, http://go.cakeandarrow.com/insurance-in-the-age-of-the-gig-economy
  6. Jonathon Shieber, “The Next Big Restaurant Chain May Not Own Any Kitchens,” TechCrunch, October 2018, https://techcrunch.com/2018/10/07/the-next-big-restaurant-chain-may-not-own-any-kitchens/
  7. U.S. Census Bureau News, “Quarterly Retail E-Commerce Sales 2nd Quarter 2019,” https://www2.census.gov/retail/releases/historical/ecomm/19q2.pdf
  8. C. GoldSchmidt and E. Smith, http://go.cakeandarrow.com/insurance-in-the-age-of-the-gig-economy
  9. J. Clement, “Third-party seller share of Amazon platform 2007-2019,” Statista, November 2019, https://www.statista.com/statistics/259782/third-party-seller-share-of-amazon-platform/