Peer-to-peer insurance

Peer-to-peer insurance is a reciprocity insurance contract based on a sharing economy concept.

General

The aim of peer-to-peer insurance concepts is to make insurance cheaper. For this purpose, a certain number of policyholders pool together. In the event of any claim they support each other financially. If there is no claim, the insurance premiums are reduced.

There are many types of peer-to-peer insurance. This article describes peer-to-peer insurance in the form of the creation of insurance brokers (as opposed to insurance companies). In this model, insurance policyholders will form small groups online. A part of the insurance premiums paid flow into a group fund, the other part to the insurer. Minor damages to the insured policyholder are firstly paid out of this group fund. For claims above the deductible limit the regular insurer is called upon. When there is no insurance claim, the policyholder gets his/her share refunded from the group pool or credited towards the next policy year. If the group pool happens to be empty, a special insurance comes into force.[1]

A group can be set up by the policyholders, forming a social network somewhat like Facebook. The only requirement is that all group members must have the same type of insurance. Examples are liability insurance, household contents insurance, legal expenses insurance and electronics insurance. The peer-to-peer insurance concept carries no costs other than the special insurance. The providers are financed through brokerage commissions of insurance companies.[2]

Historical

One of the earliest peer-to-peer insurance brokerage models was developed by the German Alecto GmbH, Berlin. In 2010, this brokerage version peer-to-peer-insurance-model was first introduced in the German insurance market under the brand Friendsurance. Large insurance companies such as R + V as well as large investors such as technology investors Horizons Ventures and the European [Regional Development Fund] (ERDF) were also won over for this model.[3][4] The background to the development was the high number of insurance damage claims in Germany. The peer-to-peer approach aims to strengthen the sense of responsibility towards the group while minimizing the number of fraudulent cases.[5]

In 2011, Friendsurance was awarded the "Service Innovation Award Insurance"[6] and nominated as "Startup of the Year 2011" in a startup competition hosted by online startup magazine "Gründerszene".[5]

In 2013, about 90 percent of those who took advantage of the peer-to-peer-insurance model were repaid contributions.[6]

In 2014, the British insurance company Guevara introduced the peer-to-peer insurance concept for car insurance in the UK.,[7] whilst Friendsurance, in cooperation with the insurance industry, expanded the peer-to-peer insurance concept to include existing insurance policies whilst keeping price and service for the existing policy unchanged.[8]

Also in 2014, P2P Protect Co., Ltd. (Chinese name 人人互保）was registered in HongKong in October 2014　as the Holding Company for a Peer to Peer Insurance model targeting at bringing transparency, claim fairness and pricing at cost to the insurance industry.

In 2015, PeerCover launched in New Zealand,[9] Riovic launched in South Africa,[10] insPeer launched in France,[11] and PRVNÍ KLUBOVÁ pojišťovna launched in the Czech Republic.[12]

TongJuBao.com, a Peer to Peer Quasi Insurance model focussing initially at covering social risks, was launched in China through a fully owned operating company incorporated in Shanghai in May 2015. The platform is launched operationally since November 2015 <http://tongjubao.com> with a product range referred to on the platform including Mariage Safety, Child Safety and Family Unity.[13]

In 2016, at least three peer to peer insurers are announced to launch in the US. Lemonade [14] in New York, Jointly[15] and Ledger Investing[16] both in California. Besure, a Canadian company from Calgary has also announced their launch for 2016. [17] These companies advertise they can reduce costs and bring transparency to the industry.


References

  1. ↑ "Friendsurance: "Der Weg war nicht leicht" - Nachrichten Print - WELT KOMPAKT - Internet - DIE WELT". welt.de. Retrieved 2014-09-05.
  2. ↑ "Unter Freunden - Macht - jetzt.de". jetzt.sueddeutsche.de. Retrieved 2014-09-05.
  3. ↑ "Innovative Crowdsource Insurance Startup Friendsurance Raises New Cash | TechCrunch". techcrunch.com. Retrieved 2014-09-05.
  4. ↑ "WMD Brokerchannel - Der multimediale Informationskanal für alle Finanzdienstleister | Friendsurance kooperiert mit R+V". wmd-brokerchannel.de. Retrieved 2014-09-05.
  5. 1 2 "Startup des Jahres 2011 – Das sagt die Jury | Gründerszene". web.archive.org. Retrieved 2014-09-05.
  6. 1 2 "Friendsurance zahlt sich aus | Mittelstand-Nachrichten.de". mittelstand-nachrichten.de. Retrieved 2014-09-05.
  7. ↑ "Insuring Yourself With A Group Of Friends Has Benefits | Co.Exist | ideas + impact". fastcoexist.com. Retrieved 2014-09-05.
  8. ↑ "So bekommen Sie von Ihrer Versicherung Geld zurück | Die Welt". Retrieved 2014-09-12.
  9. ↑ "PeerCover launches in NZ". insurancebusinessonline.co.nz. Retrieved 2015-04-29.
  10. ↑ Sikupela, Myolisi (2015-12-11). "Riovic wants to be the financial advisor in your pocket – Ventureburn". Ventureburn.com. Retrieved 2015-12-20.
  11. ↑ insPeer launches in France
  12. ↑ "Janečkova RSJ spouští první českou peer-to-peer pojišťovnu". E15.cz. E15.cz. 21 February 2016.
  13. ↑ http://dailyfintech.com/2015/12/23/peer-2-peer-insurance-is-taking-the-industry-back-to-its-roots/
  14. ↑ http://techcrunch.com/2016/02/24/still-stealthy-new-insurance-company-lemonade-continues-to-impress-with-new-hire-dan-ariely/
  15. ↑ https://www.jointly.co/
  16. ↑ http://www.ledgerinvesting.com
  17. ↑ "Besurance Corporation Launches the First True Peer-to-Peer Risk Sharing Platform | Business Wire". www.businesswire.com. Retrieved 2016-03-25.
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