P2P Insurance

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Description

0. Zack Guzman:

“Enter peer-to-peer insurance, which is at least partly steeped in the socialist tradition of sharing risks and cost. Innovators in Europe are looking to leverage the power of your friends and social networks all while asking a simple question: Nobody knows your friends better than you, so why are you paying an insurance company to analyze their risk? Instead, Guevara—a name that recalls the Argentinian Marxist icon Che—along with fellow social insurance start-ups like Friendsurance in Germany or France's Inspeer, are proposing a different model that puts a new spin on modern insurance. It allows friends to group policies together, rather than with strangers, in order to introduce a sense of control, trust, and transparency. Filing a claim comes out of the common pool of money you share with your friends, and the less claims you have, the less all of you pay. Any savings left over are either returned in cash payments or rolled over to continued coverage.” (http://www.cnbc.com/2015/07/17/the-socialist-revolution-coming-for-insurance.html)

1.

"It was only a matter of time, that the p2p concept would be applied zo the insurance sector. Friendsurance does just that. You invite your friends and relatives, and they agree to cover part of the damage. In exchange Friedsurance claims that you can save up to 50-70% of the insurance costs.

At the moment Friendsurance offers general liability insurance, household contents insurance, legal expenses insurance and and cycle insurance.

How does this p2p insurance work?

Each of the invited friends will have to contribute 20 EUR in case an insured damage occurs. The remainder of the damage amount is covered by a conventional insurance.

Friendsurance says the costs savings are substantial since the concept:

   * prevents fraud
   * prevents misconduct (through social control)
   * eliminates sales costs
   * discourages claims for small damages
   * lowers administration costs"

(http://www.wiseclerk.com/group-news/countries/germany-friendsurance-first-p2p-insurance-concept-launched/)


2.

"Isn't an insurance essentially a social network to share risk?

This is the question that got Tim Kunde, an entrepreneur based in Berlin, to launch Friendsurance, a website that is now considered the pioneer of what one day may be called “social” or “person-to-person” (p2p) insurance. The idea is to more efficiently replicate for a group of friends what traditional insurance companies do for a large number of strangers.

Friendsurance offers household, personal-liability and legal-expenses insurance. Large claims are still covered by normal insurers, with whom the firm has partnerships. But the costs of smaller claims, which would normally be paid by a policyholder as part of a “deductible” amount, are shared within a small circle of friends, who can either sign up as a group or hook up on the site. Part of their premiums are set aside to settle these small claims. If something is left over at the end of the year, each friend gets back his share. “We are essentially insuring the deductible,” says Mr Kunde.

Take personal-liability insurance, a must-have for most Germans, who are among the world's best-insured people with an average of more than five policies each. German students pay around €55 ($71) annually to insure damages up to €10m. If five friends band together and none makes a claim, they will get about €24 back at the end of the year (the rest is kept to fund larger claims). Even with several small claims, there will probably be some cash returned.

There should be benefits for Friendsurance and its partners, too. “Insuring in self-selecting groups can improve the quality of the risk,” says Dave Aron of Gartner, a consultancy. Friends tend to be more honest with each other, which makes fraud more unlikely. They are also less likely to put in for very small claims—a broken teapot, say—which generate a lot of costs for traditional insurers. And social insurance is viral: customers have an interest to spread the word and get other friends to join in." (http://www.economist.com/blogs/schumpeter/2012/06/peer-peer-insurance)


Examples

Map of start-ups in 2016 at http://www.web-strategist.com/blog/wp-content/uploads/2016/05/Insurance_10-2-1024x539.jpg

Directory of Crowd-Based Insurance Startups:

Compiled by Jeremiah Owyang [1]:

  • OnSource On-Demand Inspection On-demand visual inspection by a group of independent crowd workers
  • trov On-Demand Insurance On-demand protection for belongings – home, auto, personal property. Easy to turn on/off.
  • Tong Ju Bao P2P Broker TongJuBao is a P2P insurance platform that helps its users manage risks. TongJuBao was developed by QiBao Investment Consulting (Shanghai) Co., Ltd, a WOFE (wholly owned foreign entity) and is ultimately controlled by its French founder, Tang Loaec. (CB Insights)
  • Broodfonds P2P Insurance – Crowdfunding Group of freelancers crowdfunding each other’s sick leave
  • PeerCover P2P Insurance – Crowdfunding Join group, pay fee upfront, users decide if claims are fair and can get up to 5x your balance to cover claims. ‘Crowdfunded cover’
  • MetroMile Pay-Per-Mile Auto Insurance Metromile is a car insurance startup that offers pay-per-mile insurance and a driving app. It is currently the only company offering pay-per-mile insurance in the United States.
  • CommonEasy P2P Insurance Broker CommonEasy is a peer-to-peer insurance platform that utilizes the power of the crowd to collectively insure and protect material possessions, homes, and livelihoods.
  • Besure P2P Insurance Broker Peer-to-peer risk sharing for property insurance, not currently launched.
  • Friendsurance P2P Insurance Broker Pools users into small groups. Brokers with 60 insurance partners.
  • Inspeer P2P Insurance Broker Users form small groups for auto, motorcycle, and home insurance. Users pledge to cover up to a certain amount.
  • Guevara P2P Insurance Broker – Auto Pools friends and acquaintances, or other small groups, for car insurance.
  • Gather P2P Insurance Broker – Business Business insurance shared across a group/community.
  • Bought By Many P2P Insurance Broker – Long-Tail Works with insurers to develop policies and negotiate discounts for long-tail insurance needs like pet insurance, cyclist insurance, etc.
  • SafeShare P2P Ins Broker – Share Econ Develop insurance products and partner with sharing economy businesses to offer users and providers insurance solutions. Work to fill in the gaps of insurance for Sharing Economy providers and users.
  • Cycle Syndicate P2P Insurance Carrier – Cyclists Bike insurance shared over a small group. Insurance held by cycle syndicate.
  • Lemonade P2P Insurance Carrier Lemonade is peer-to-peer insurance and one of the only carriers, but they’ve yet to launch. Groups of policyholders pay premiums into a claims pool, and if money is left at the end of the policy period, they get refunds.
  • Uvamo P2P Insurance Carrier Uvamo, which plans to launch by the end of the year, aims to cut administrative costs by offering property and casualty insurance direct to consumers online. Those policies can then be diversified and grouped into a pool, which collects all the premiums paid by the policyholders. -CNBC

Status

“Friendsurance, which was founded in 2010, says that 80 percent of its customers who went without property claims received cash back payments equal to a third of what they were paying in premiums. Guevara says pooling premiums policyholders can save 80 percent on insurance. … While it took some time, the company now boasts 60 insurance partners that are seeing high overhead costs, particularly on fraudulent and small claims, shrink. … User growth at Friendsurance is rising at a rate of about 10 percent to 20 percent per month, which is good enough to get increasing attention from venture capital funds. Li Ka-shing's Horizon Ventures, known for investing in startups darlings like Spotify and Skype, led Friendsurance's round of funding in 2013. Now, the company is exploring where to expand next.” (http://www.cnbc.com/2015/07/17/the-socialist-revolution-coming-for-insurance.html)


2016

Jeremiah Owyang:

"We’re now seeing the rise of a growing set of startups in the insurance industry that are enabling P2P, pro-rata coverage or crowd-based models that leverage the crowd. These emerging insurance tech startups include mostly peer-to-peer offerings, with a handful that are also improving the delivery of insurance through new technologies.

P2P insurance allows for more people to be insured by aiding underserved markets. It provides coverage for gig workers in the collaborative economy, while collective purchasing yields preferential pricing (or even funds returned) to those subscribed to peer-based insurance programs. With most of the emerging startups acting as brokers, the insurance carrier startups are still forthcoming in the insurance world. Lemonade is a clear example of this (though they’ve yet to launch).

There are several companies popping up for specialized insurance, too. From insuring cyclists to pet owners, and one––Bought By Many––that specializes in ‘long tail’ insurance. This means insure those items that aren’t often insured. Then, there’s Trōvthat provides ‘on-demand’ insurance, for those who want to insure in the moment by simply snapping a pic in the app, granting fast coverage. It’s coverage for when people seek access over ownership." (http://www.web-strategist.com/blog/2016/05/24/market-snapshot-crowd-based-insurance-startups-on-the-rise/)


More Information

http://www.economist.com/blogs/schumpeter/2012/06/peer-peer-insurance