Since 2020, buying behaviors have shifted significantly in favor of at-home purchasing options. As such, the global on-demand economy is expected to reach $335 billion by 2025, according to PwC research.
Driving for on-demand apps such as Uber, Amazon and DoorDash is becoming an increasingly popular option for workers looking to drive fulltime or supplement their income from other employment. INSHUR’s new Driving the On-Demand Economy report finds that nearly three in four drivers (73%) say they are driving longer hours than a year before – with 44% saying they are now driving twice the number of hours.
Encouragingly, three quarters (74%) of on-demand economy drivers also say they are satisfied with their work-life balance, with 38% saying they are very satisfied – suggesting that drivers feel they are achieving control when driving for on-demand apps.
Job satisfaction is high for on-demand economy drivers – and they like meeting people
After the ability to work flexibly, on-demand economy drivers say they choose to drive for job enjoyment/satisfaction (37%) and better pay than other available jobs (31%). In fact, almost three quarters of Californians and 79% of New Yorkers are pretty satisfied with driving for on-demand apps.
35-44 year olds are most likely to say that flexible working hours are important to them (72% vs 52% of 18-24s), possibly due to the fact that many people in this age group will be looking for roles that fit around their lifestyles, such as parenting or other employment.
It’s a different story for New Yorkers, where almost a third (30%) of drivers say they drive to meet new people. Hispanic and Latino drivers are also most likely to value meeting people as a real benefit of driving for on-demand apps, at 24%.
In some US regions, on-demand apps are helping to plug unemployment gaps
15% of on-demand economy drivers say they became drivers after being laid off – in Memphis, 23% of drivers agree. Over a quarter (27%) of EasyTaxi drivers started driving after they were laid off.
Men are ten percentage points more likely than women (36% vs 26%) to say that they started driving for on-demand apps because the pay is better than other roles available to them. Dallas-based drivers (24%) are also the most likely, of all the cities, to say this is why they started driving, while also being the most likely city residents to say that driving offers them opportunities when they lack the skills for other roles.
Drivers’ hours are increasing significantly, showing a boom in entrepreneurialism
INSHUR’s data indicates that the majority of on-demand economy drivers drive part time or as a supplement to other incomes. While almost a fifth (18%) of drivers say they drive over 151 hours per month – equivalent to a full time job – over half of drivers (52%) drive under 50 hours per month. Three quarters (77%) of on-demand drivers are also employed, most commonly in retail (16%), technology (13%) and construction (9%).
While nearly three in four drivers (73%) say they are driving longer hours than in December 2022, and 44% now driving twice the number of hours, men are significantly more likely to drive more than 100 hours per month than women (34% vs 27%) – suggesting that driving is, more often, their main source of income. Just under three quarters (73%) of women drive fewer than 100 hours per month – equivalent to 12.5 days a month, or 3 days a week – falling to 66% of men, suggesting women are more likely to drive around other responsibilities and at weekends.
The ability to make money on their own terms and in their chosen hours means there is a spirit of entrepreneurialism amongst all on-demand economy drivers: by far the largest proportion of drivers (66%) say they choose to drive for on-demand apps because of the flexible working hours on offer. But as on-demand driving gains exponential growth, so does the opportunity to nurture drivers to become de-facto business owners in what can be an extremely rewarding industry.
Drivers from underrepresented ethnic groups are disproportionately supporting the ever-increasing demand for on-demand services: they are significantly more likely than White drivers to have doubled their hours driving for on-demand apps in the past year (49% vs 39%). Over half of Black or African-American drivers (52%) say their hours have more than doubled in just one year.
Money matters
INSHUR found that on-demand economy drivers are juggling multiple burdens on their finances, especially women, with only 5% saying they have no burdens on their finances, compared to 9% of men. Almost half of women say that home bills (47%) and rent/mortgage (44%) are their biggest financial burdens, compared to 38% and 37% of men, respectively.
This means that for many, keeping on top of finances is the main motivator for driving. While the ability to work flexibly and job enjoyment are the most common reasons for Americans to choose to drive for on-demand apps, almost a third of on-demand economy drivers (31%) also say that driving offers better pay than other work available to them.
The on-demand economy offers drivers the opportunity to improve their income, when employment options are limited. 15% of drivers say they became drivers after being laid off, rising sharply in Memphis (23%), while 18-24 year olds (18%) and Asian drivers (18%) are the most likely groups to say they drive due to lack of other skills.
Insuring the on-demand economy
To drive for on-demand economy apps, drivers need commercial auto insurance – which varies between Rideshare and Delivery as well as by state regulations, meaning that traditional insurance policies can struggle to satisfy the needs of individual drivers.
Over a quarter (27%) of drivers say that vehicle insurance is one of the biggest burdens on their finances, with 24% of Rideshare and 20% of Delivery drivers claiming that insurance is too expensive. This rises to 27% of Asian and 26% of Hispanic and Latino drivers. 10% of female drivers say that over half of their earnings from driving go towards vehicle insurance, as well as 18% of 18-24 year olds, who typically pay higher premiums and drive fewer hours.
Is there a role for apps to play in resolving this issue? Their drivers think so.
Just over a quarter of drivers (26%) say that on-demand platforms should make efforts to offer better pricing for insurance to their drivers, and 25% say they should also offer help with buying insurance. While women (27%) are more likely than men (23%) to say they need help buying insurance, men are six percentage points more likely than women to say better pricing is a priority for them (29% vs 23%). Hispanic and Latino drivers are the ethnic group most likely to say they need help with buying insurance (27%), with Asian drivers least likely to agree (18%).
It takes both an insurance and technology specialist with a deep understanding of insurance loss ratios and dynamic pricing models to offer personalized insurance products for individual drivers. Underwriting expertise plays a significant role in providing fair insurance products, especially when drivers are using multiple apps.
Dan Bratshpis, CEO and co-founder of INSHUR, says: “Rideshare and Delivery drivers are the backbone of this burgeoning economy – what we call the On-Demand Economy – and they are transforming the world of commerce in the US, creating the most profound economic shift in four decades. In order for the on-demand economy to survive and thrive, insurers and on-demand platforms should consider drivers’ feedback carefully and continue to work together to build better commercial auto insurance products for drivers and their lifestyles.
“Insurance models need to become more flexible and use data more effectively to enable drivers to access the exact level of coverage they need to match their work and lifestyles. Platforms’ data (such as delivery or trip data), claims and other proprietary datasets such as speed, incidents, driving ability and safety, can help insurers to make sure that coverage is comprehensive and adaptable to the type of work the on-demand driver chooses to do. This helps to mitigate any risk of alienating drivers who have chosen flexibility and financial control over traditional working patterns, as well as delivering insurance products where drivers can easily access them – keeping them on the road and earning.”
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