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Factors impacting risk exposure for Last Mile Delivery companies and opportunities to consider

Insurance and risk solutions for your Last Mile Sharing Economy business

As with any gig or sharing economy business, rapid entry to market and expansion can lend to unforeseen risk exposures. For gig workers, this way of working is heavily influenced by their choice of lifestyle, as they access benefits such as flexibility and additional sources of income. However, as more customers and riders use the platforms, the risks increase exponentially for all parties.

For many Last Mile Delivery companies, the desire to deliver minimum standards for gig workers, while simultaneously protecting the flexibility and autonomy that the industry provides, is the balance to strive for.

Alongside the ever-changing industry landscape, there are many external forces that impact the industry itself, such as changes in regulation, he factors that can be influenced by regulation are vast.

This article can help shed some light on key impacts for Last Mile Delivery companies to consider.

Potential disruption from changing regulation

The Federal Government is currently reviewing the expansion of the industrial relations system and researching how to extend traditional employee rights to gig workers. While it is still early days, it’s worth noting that regulators can set minimum standards but do not often lead the industry due to the rapid changes the industry undergoes regularly. For example, they may not necessarily take into consideration unique trends such as the impact of working visas in individual’s entitlements to compensation.

The opportunity to lead the way

As government regulation often does not align to the fast-paced nature of last mile delivery, it is often up to the company to discern their policy for risk coverage and if, and how, they want to support their riders.

While companies are not obliged to provide coverage, it’s worthwhile considering employment trends, such as the ‘Great Resignation’, which estimates that a fifth of workers plan to quit in 20221, and what makes a company desirable for drivers to choose their platform.

Last mile delivery services are one of the most competitive segments in the sharing economy sector. It’s expected to grow globally by 16% CAGR by 20222. Recent trends have seen a shift towards leading delivery companies voluntarily providing some insurance to help encourage riders and drivers to use their platform.

Determining a support system is a great differentiator companies can leverage to drive demand for their platform.

It comes as no surprise that there are benefits to protecting your riders and drivers. The benefits of supporting riders and drivers with public liability, sick leave and other insurance solutions can help attract users and differentiate from competitors who only hire self-employed users.

One size does not fit all for workers’ compensation for drivers

Companies must consider multiple impacts affecting someone’s ability to work, such as medical expenses, time out of work, maternity leave, parental and sick leave and bereavement.

As some companies have ended up paying millions of dollars in Australia in claims to support their workers, a good strategy could help alleviate and minimise costs associated with workers’ compensation.

Protecting riders and drivers is a common goal

Personal accident and third-party liability can help protect a rider or driver and any other parties should they find themselves in an accident. This is one of the most prominent concerns for last mile companies, contractors, regulators and the public.

There are several ways companies can offer some support for their network without covering all the costs, such as paying premiums but leaving excess to the drivers. This approach is dynamic and can be reviewed to consider things like lump sum benefits for accidental death or catastrophic injury, income protection and more.

Greater need for cybersecurity measures

The role IT solutions play for last mile delivery companies is integral to keeping them running every minute, 24 hours a day. It’s equally easy to overlook the value of a strong cyber policy to assist in both offering some coverage and mitigating risk exposure.

Operators in this space will also need to be aware of any data handling regulations they need to comply with, as errors in this area are extremely costly from a remediation perspective, but also potentially in terms of fines and penalties from regulators.

Long term, increased interoperability and the sharing of data will greatly widen the cyberattack surface for those engaged in last mile delivery. Cyber resilience needs to be embedded into this model at all levels.

What can last mile companies do to plan for their risk strategy?

For last mile companies, their business model and company trajectory greatly impact their risk exposures. The appetite to support their network also will vary depending on internal and external factors impacting the competitive landscape and internal operations.

Marsh can assist Last Mile Delivery companies in understanding their risk exposure and can help put in place strategies for risk mitigation and cost reduction. For riders and drivers, Marsh can assist in breaking down the benefits on different programs that could result in better outcomes for them.

Please contact the Sharing Economy team to arrange a consultation relevant to your business needs.


1 World Economic Forum, Great Resignation not over: 20% of workers will quit in 2022, June 24, 2022

2 Fairfield Consultancy Services OPC Pvt Ltd, Last Mile Delivery Market Set to Expand at over 16% by 2025, Forecasts Fairfield Market Research, 8 June 2022

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This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication, or any matter contained herein. LCPA 22/443