Insurtech: Evolving Insurance Business models

This article briefly covers some innovative business models/companies at work in InsurTech.

Wave 1 — Distribution model

The pioneer of P2P insurance from 2010, Friendsurance pools its users into small groups and gives its customers a cash-back bonus at the end of each year if they remain claimless.

Customers form friends and family groups to share the excess element of a claim. This enables high deductibles, thereby reducing premiums from the insurance carrier. The group shares the benefit of lower premiums and provides each other with financial cover for the higher deductible if there is a claim.

This is a friend and family savings scheme to provide financial cover for deductibles in the event of a claim. Like Inspeer, the higher deductibles result in lower premiums for everyone in the group. However, unlike Inspeer, in the event of a claim, members get up to 3x their initial contribution back to cover their excess.