The Rising Importance of Professional Indemnity in the Gig Economy

Since the emergence of COVID 19, businesses and companies around the world have been forced to adjust to the new economic climate presented by the dominance of digital technologies, and the ability of employees to work remotely due to the tools provided by the Internet of Things. While the last 24 months have seen extensive layoffs and redundancies occur in organizations across all industry sectors, there has also been a growing trend of employers turning to the freelance market to overcome short-term operational deficiencies.

In both Hong Kong and China, more companies are turning to freelancing opportunities to solve human resource problems. In many cases, businesses and workers are seeing a win-win with regards to increased employment on a temporary or freelancing basis, as the company is able to complete projects on deadlines, and the worker has the opportunity and the flexibility they need to perform the tasks within their expertise.

Consequently, white collar freelancing is becoming increasingly common in areas including finance, information technology, design and multimedia, and in some cases even HR.

But it is important to understand that a freelancer is not an employee of a company, and may not be able to receive all the same protections as a salaried worker employed on a full-time basis by a business. As such, steps should be taken to protect freelancers in any sectors they may be operating in. A great way to start is through a comprehensive Professional Indemnity Insurance policy.

What Is Professional Indemnity Insurance?

Professional Indemnity Insurance, also known as Professional Liability Insurance, or Errors and omissions (E&O) insurance, is a form of protection that covers the policyholder from losses due to mistakes in their work.

Consider this, an independent software developer is contracted by a company to finish a project. When the project is delivered, it is alleged that there is an error in the code supplied by the freelance developer. The error has resulted in costly losses for the company that operates the software, which is now going to sue the independent freelancer in an attempt to recover those costs.

In such a scenario, even if the alleged claim has no basis, simply mounting a defense can be a costly and time-consuming effort. In the case of a sole proprietorship or an independent freelancer who has been contracted on to do a one-time project, this can be a catastrophic scenario.

Professional Indemnity Claims are Common

In the world of business professional Indemnity claims are fairly common. A realtor does not disclose critical information about a property. A contractor fails to provide the assets required to complete a project. An accountant accidentally deletes an excel file containing the tax records of a client. A graphic artist is found to be in copyright violation on the poster they made for a concert.

All these are very realistic scenarios that would be supported via the existence of a professional indemnity insurance policy.

Unfortunately, mistakes happen – even with the best laid plans, and with no intent of malice or negligence, things can and will go wrong. This is as true for a multinational MNC with a large amount of funds, as it is for a gig worker freelancing jobs on Fiverr.

It is important to be prepared.

Professional Indemnity Considerations

Professional Indemnity is not a requirement by law in Hong Kong, but it may be a mandated purchase for individuals or entities operating in specific industries. For example, all insurance intermediaries in Hong Kong are required to hold Errors and Omissions insurance protection to cover against their risk of giving bad advice – insurance brokers, such as CCW Global, are included in this requirement. This is due to the simple fact that the costs associated with any claim of negligence or wrongdoing falling under the scope of Professional Indemnity protection will, as previously stated, be high.

In some cases, depending on the work being done, a client may request a business or independent contractor to obtain E&O Insurance to provide peace-of-mind that if anything goes wrong, restitution will be made available.

The premiums associated with Professional Indemnity Insurance in Hong Kong are generally related to the revenues of the organization receiving cover – a more successful company or operation, generating higher levels of revenue, will pay a higher fee for any professional indemnity insurance protection they obtain. This does mean that, for freelancers, the costs of Professional Indemnity can actually be fairly reasonable, as the revenues associated with independent workers can be lower than with an organization employing multiple individuals on a full-time basis.

Professional Indemnity Insurance in Hong Kong

No matter whether you are an independent freelancer, or an established company, professional indemnity can be invaluable if it is alleged that you have made a mistake in your work. Defending allegations of errors will be expensive involving lawyers, and will cost time that cannot be used on continuing your work.

CCW Global is an expert independent insurance advisor with more than a decade’s experience in assisting businesses of all sizes find the perfect insurance protection for their needs. Our professional indemnity options are available from some of the world’s leading corporate insurance underwriters, and can provide your operation with the security of comprehensive support in the event that it is required.

CCW Global is able to provide an array of Hong Kong business insurance and can help you ensure that your freelance operation is fully protected against any eventuality.

Request a free, no-obligation, Freelancer Insurance Consultation with an advisor by Contacting Us.

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