Adeetya Tantia examines the impacts of home working
It has been more than two years since COVID-19 swept the globe. With more than six million people dead and business losses in the trillions, the pandemic caused a seismic shift in the way we think about work, life and how we balance the two.
The pandemic accelerated the shift to home working by at least a decade. A huge number of white-collar jobs have gone fully remote since it began, and while people are being encouraged to go back to the office, office working levels are unlikely to reach pre-pandemic levels again. The first order impact of this is on the global commercial real estate market – remote working has contributed to a 30% decrease in demand for commercial real estate, an industry that already had too much supply. In consequence, insurance demand for this estate will probably also decrease. On the other hand, demand for co-working space may be on the rise for both established companies and fledgling startups. Employers’ liability may decrease on a per employee basis because home working decreases the physical risks they are exposed to, while fidelity guarantees are more likely to be tied to a company’s cybersecurity sophistication.
In the travel space, the fact that home working enables people to work from anywhere has blurred the vacation and work paradigms, causing an increase in longer-term bookings and flexible options on sites such as Airbnb. Travel insurance for such ‘workcations’ will need to be tweaked – something that the ongoing parameterisation of the product is primed to profit from. This phenomenon could also lead to new business interruption policies. For those who do remain at home, the lack of privacy in shared housing may lead more people to move into smaller but more private spaces, increasing demand for renter’s insurance.
Home working has decreased walk-in traffic to restaurants and cafés, where the highest fixed cost is the rent. Conversely, food delivery companies such as Deliveroo have seen a swift uptick in business and the rise of ‘cloud kitchens’ – a strategy that might have a lot more potential in the future. Insurance products tailored for such delivery side-hustles, covering all risks and possibly operating on an hourly basis, are set to become more popular across the last-mile delivery industry.
With many no longer having to commute, people are tending to drive less. From an insurance viewpoint, this could signal a shift towards pay-as-you-go insurance models, providing more value for money. Car ownership may, in fact, decrease altogether, leading to a rise in business for companies such as Uber. With the right investment, public transport could also see a resurgence in both large and small cities.
Airlines are set to recover slowly, with revenue recovery lagging behind demand recovery. This is primarily due to the lack of business travel, with more and more business now doing business virtually.
Home working allows employees who have long-term care obligations for the elderly or children to be there for the cared-for persons’ needs. This could affect payments made for long-term care under medical policies, and could also be used as a potential rating factor. Elsewhere in the health and care field, the pandemic has put a spotlight on mental health, which could lead to an increase in the provision of mental health services – in turn causing higher medical costs for insurers. The effects of long COVID are as yet unknown, and it may be a new long-term recurring disease that affects medical insurance payouts.
Innovation often comes from people serendipitously bumping into each other – something that, pre-pandemic, was seen and encouraged in open-plan offices. This innovation is lost with online meetings. Another home working casualty has been the casual post-meeting chat between company seniors and juniors; these can provide important learning moments in which people can notice subtle cues or pick their colleagues’ brains. In addition, one third of all relationships begin at work. The remote work movement negatively affects this and will most likely push people towards online dating – an area that has an inherent inequality, with 20% of men getting attention from 80% of women. How these trends will affect our society are yet to be seen.
Will we all be working remotely forever, or will we go back to office? Most companies are trying out different models to find out which work best for them – and employees will increasingly choose their job based on the work culture they want. The pandemic and its impacts will be studied for decades to come, and its full effects will not be definitively known for some time.
Adeetya Tantia is student editor