Technology breathes new life into an old-fashioned insurance concept.

In previous blogs in this series, I have talked about emerging distribution models for insurers.  The last of the five new models, the “P2P Network Operator” is actually a reworking of a very old concept.

The concepts of affiliations and mutual insurance have been around for a long time.  Now, however, the abundance of social and digital data is providing customers with new ways to pool their risk with others. Insurers can harness these channels to facilitate the creation and management of these risk pools. In doing so, they can tap into personal or professional affiliations and networks to reach consumers in new ways.   And they can give customers more transparency into the social good that has long been associated with insurance but is sometimes masked by the sheer complexity of administering a large portfolio of risks.

Insurers who adopt the P2P Network Operator model could reduce their distribution and claim costs while extending their customer base around this “common good” value proposition. UK P2P insurance operator Bought by Many, for example, uses online search data to identify and create pools of “members” with very specific insurance needs. The fintech company then negotiates price or discounts with insurers willing to write the group. 

Despite its relative novelty, there is customer interest in the P2P insurance model. Accenture’s 2017 Global Financial Services Consumer Survey found that 55% of respondents would consider P2P life insurance, while 38% would consider P2P for auto and 32% for household insurance. Baby boomers (32%) were more likely than seniors (27%) to consider it. At the other end of the age spectrum, 48% of generation Z respondents would consider P2P insurance. 

Next week we’ll discuss why insurers need to act quickly to develop new distribution models.

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