Rob Hartley, co-founder of Dinghy, is part of a cohort of changemakers who are working together through the Economic Security Impact Accelerator – a pilot programme in partnership with Mastercard Center for Inclusive Growth – to have a greater impact on the economic security of UK workers. Here he describes the growing problem of economic insecurity and how industries need to respond.
Have you ever jumped out of a taxi to go to a cashpoint, only to find it isn’t working? Did you feel that pang of doubt that you wouldn’t be able to pay for the taxi even though you had already started the journey?
Welcome to the world of economic insecurity.
It’s easy to dismiss the term “economic insecurity” as an abstract phrase that affects the least well off in society. However, it can affect us all. It is not just a lack of money, it is the sense that you might not make it through the month: that feeling that if you lose your job you won’t be able to pay your rent. It is the lack of a financial safety net. It is a feeling – a general sense of uneasiness that is resonating through society and which is growing across the middle and lower classes.
Rents in London have reached an unacceptable level. It is initially funny seeing an advert to rent a bed on a desk – but on reflection the humour fades and the realisation dawns that it’s not a joke. It’s a real advert, and it’s part of the story that economic insecurity is rife across the country.
It’s hard to visualise the whole picture, as we live in a divided world where social media works to portray only the positive. Nobody posts on social media “my favourite band played last night but I couldn’t afford to go.” Social media has become a marketing outlet where we have become our own commodity. We only ever see the pictures of people going to gigs; we paint the impression to each other that life is always rosy.
But it’s not.
In October 2018 the Office for National Statistics reported that spending exceeded income for the third quarter in a row. As the Financial Times reported: “This comes as unsecured debt – credit cards and other short-term loans – has hit a record high of £214 billion, according to the Bank of England. According to estimates of pension provider Aviva, the UK’s unsecured debt equates to average of £7,800 a household.”
If you’re feeling that this debt level is resonating with you, then you are not alone. It’s just that we don’t talk about it. Economic insecurity is not just in the realm of the poor; it is all around us.
So what can we do to get things back on track?
It’s easy to say “spend less” but the answer is not that easy. Cut back on what? Spend less where? Current business models are entrenched in providing products and services in ways that contribute to economic insecurity. Trying to find alternatives isn’t easy.
The better answer is to look at how our businesses contribute to economic insecurity and see if we can change it ourselves. Can we make it easier for people to find the same great products, but with cost inefficiencies removed? Can we use technology to streamline services, cut costs and improve the flow of money? Can we reduce fees and costs for customers? Can we provide flexibility to meet the changing demands of the way we live and work?
My industry is one that almost all of us use every day – one of the most distrusted industries, which people (falsely) think is out to “rip them off”. If you haven’t guessed it, I’m talking about insurance.
One day I was shocked when I heard a call centre representative tell a customer that they were better off keeping their insurance running for another three months instead of cancelling it, as the cancellation fee was higher than the return premium they were due.
That response truly concerned me – how had we got to a point in society where it is okay to have that as a business practice? If someone has finished using something, why do we keep charging them for it? How could a £50 cancellation fee be justified when the actual admin cost to the company was nearer £5?
We also increasingly live in a renting culture where it’s common to move home each year, perhaps because of changing house shares or because landlords increase the rent or sell the home. But typically when you change your address your insurance provider charges an admin fee. Maybe it’s £20 for each policy, which doesn’t sound that bad; but if you have car, home, gadget, life and health insurance then suddenly it’s an extra £100 a year just to move home. All of these “incidental” costs suddenly add up, chipping away at your economic security and making it harder to save for a rainy day.
All of our industries contribute to economic insecurity one way or another. However, they all have the potential to evolve and change to improve this situation. Out of this desire to find solutions in insurance is where Dinghy was born. We have stripped out admin fees and cancellation fees. We have created an on-demand product where our customers only pay for the insurance they use. Our customers don’t get told when they cancel that they might owe us money. We’ve done it through using technology to provide a 24/7 online self-service area.
The world of work is shifting; our way of living is shifting. Services and products need to change with the times so that they can introduce efficiencies that encourage economic security.
As more and more people turn to freelancing or side hustles to make a living, financial services need to adjust with them. That’s what we are doing with Dinghy. We are listening to the pain points that our customers have and devising ways to solve them. We will learn and adapt with our customers and with the core belief that we can create a more flexible, fairer insurance product.
On this journey it is great to meet like-minded people working in both insurance and across all spectrums of society all looking at tackling this issue. Being part of the Economic Security Impact Accelerator has already led to exciting conversations opening up between Dinghy and the rest of the cohort about how we can all work together to create a better future.
The future of work is changing and there are great products and services emerging to ensure that we have all have a brighter future with better economic security.
We'll be sharing learnings from the Economic Security Impact Accelerator at our event, How to be an impact entrepreur, on 12 September.
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Has the interest (excuse the pun) in Universal Basic Income, aka Living Income Guarantee, waned to the point of eclipse?
It still seems to me that economic security should mean that society (ie a properly constituted democratic government) should give everybody a 'credit' card guaranteeing they have enough for food, accommodation, medical treatment, communication and transport. Personal income people accumulate above that amount is then taxable on a progressive scale.
This provides the economy with a 'floor' to keep the system flowing, even when we encounter difficult circumstances like Covid-19 or market failure. It reduces anxiety (which often becomes suicidal) through people's individual fear of having no income. It gives government time to deal with downturns calmly, rather than the panic we are seeing now in 2020. It treats all members of society as equally deserving, instead of treating people as failures needing welfare. That seemed a good idea after World War 2, and it was certainly better than in the 19th Century workhouses and debtors prisons.
People here in Canberra regularly write letters to The Canberra Times supporting UBI, yet the idea seems to have disappeared from serious discussion. Do we need a new political party with UBI (or better LIG) as its basic policy platform?