5 Ways the On-Demand Economy Is Changing Risk Profiles and Regulations

By: | June 5, 2019

Jillian Slyfield serves as Digital Economy Practice Leader at Aon. In this role, Slyfield addresses digital disruption of traditional industries and the on-demand economy. Her focus areas are Alternative Mobility, The Future of Work and New Economy Digital Risk. She can be reached at [email protected].

What does tonight’s dinner, a toy for a birthday party, a prescription, and groceries for the week have in common? Five years ago – nothing. Today, each of these items can be delivered to your door, often by an independent contractor, coordinated through an app on your smart phone.

The growth of platform-enabled delivery is nothing short of astounding. According to Statista (2019), online grocery shopping sales in the U.S. in 2012 were approximately $6 billion. In 2021, they are estimated to balloon to $29.7 billion. Additionally, meal and consumer goods delivery are growing at a similar pace.

The on-demand economy is not only opening new opportunities, it is changing risk profiles, creating business challenges, and at the same time, prompting new legislation and regulations. The risk issues for a business associated with platform-enabled delivery are numerous. It makes good sense to look at five of the most prominent risks:

1) Driving

Independent contractors and/or employees driving to and from stores and deliveries (otherwise known as Shoppers) can harbor the most significant exposure for a commercial entity. At times, the driver may have others in their vehicle, including family members and children.

Additionally, despite regular checks of in-force personal auto coverage, there are times when the personal auto coverage does not respond, or is no longer in-force.

2) Unsupervised access to customers’ homes

Thorough selection of Shoppers is critical. When a Shopper is dropping off an order to a customer’s home, the Shopper may have access to a customer’s home, automobile, prescription drugs, firearms or vulnerable family members, such as children or the elderly.

3) Increased liability exposure on retail/grocer premises

Shoppers could be working on behalf of multiple customers or shopping for themselves — all at the same time.

This multitasking could lead to overlap and confusion regarding work versus personal time. It could also lead to greater exposure for lifting, falling, bodily injury to third parties, or damaged goods.

4) Independent contractor employment exposures

Independent contractors who are injured on the job are not covered by workers’ compensation. They do, however, have the same exposure to a work-related injury or illness and may need medical coverage or wage replacement in the event of an on-the-job incident.

In this case, the business could direct the independent contractor to an occupational accident policy or buy a policy that responds to all independent contractors while working on behalf of the commercial entity. The status of independent contractors may come into question and result in a wage & hour claim made individually or as a class action.

5) Trust and safety

While the risk management team is tasked with protecting the financial interests of its commercial entity, the Trust & Safety (T&S) team is charged with protecting the customer and/or independent contractor at the time of transaction.

In platform-enabled delivery, the T&S team will create the standards for Shopper selection based on data, such as a background check, written test, interview and driving record. They will also set customer behavior standards, including an in-app rating mechanism and specific feedback from the Shoppers.

Shoppers’ personally identifiable information (PII) and customer PII as well as data collection around buying habits, family composition, special interests and personal insights must also be protected.

The physical safety of the Shopper and customer, at the point of delivery as well as before and after the delivery is of critical importance. Protections may include hiding phone numbers and securing delivery information after the transaction.

For businesses to thrive during this rapid expansion, those that implement a program of adaptation can harness this disruption to their advantage. A first step is to focus on greater collaboration between risk managers and the underwriting community, and even their respective competitors, to ensure sufficient insurance is available for all parties.

Regulators and lawmakers are also interested in platform-enabled delivery and will want to work closely with the risk management team on issues of compliance with laws pertaining to auto insurance and employment.


The underwriting process for platform-enabled delivery is more nuanced than other business models. Usage based insurance (UBI) with miles or deliveries as the exposure basis are common.

Developing a sustainable and efficient rate often includes input from the business, underwriter and broker actuaries. It may also mean taking a second look at captive solutions to smooth pricing fluctuations and fast-track creative products. &

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