Grassroots Insurance

Dan Finlay
Dec 3, 2019 · 9 min read

How safety nets emerge naturally from people caring about each other, and how we can use the internet to safely multiply this effect many times over.

Insurance is a huge industry, yet is riddled with social problems from fraud, to price gouging, to unjust rejection of claims. In some cases like medical insurance, claim rejection can mean life or death, and so for those affected, there isn’t a more serious topic. In this article I’m going to describe a solution to the insurance problem. It’s simple in concept, but delicate in execution, because it depends on the informed participation of large social networks.

How can we bind ourselves together, to create the support systems we need?

Care is Natural

In small groups who trust each other like a family or a village, cooperation and help can be completely second nature. This has been called everyday communism, but does not require any kind of government or formal organization. It’s just the social tendency to help what you can.

Trust is Transitive

There’s a profound thing that people do all the time, and have done for millennia: We vouch for each other.

Game of Thrones Season 8 Episode 2 depicts a high-stakes social voucher.

I can safely trust you to put me at risk up to how much you value our relationship.

The above sentence as a formula, as described in Szeidl and Mobius 2007. V is the amount I can safely trust you, c(s,t) in this case is how much you value the relationship.

Social Insurance

Applying this to the insurance example, while you might eagerly pay all of a spouse’s medical bills, what would it take for you to confidently chip in for a friend? Or a friend of a friend? Or a friend ten times removed? Or an enemy?

Fair Claim Evaluation

The claims process in insurance today is adversarial: When you apply for insurance, you may be rejected for a pre-existing condition, because the mere risk of paying out is antithetical to accepting your premium payments. When you submit a claim, your rates immediately increase because you’re assumed to be an increased risk. A claims investigator working on behalf of the insurance company looks for any clues that you were looking for any easy pay day, and all for good reason:

  • Bob, her nephew.
  • Charlie, Bob’s childhood friend.
  • Darlene, Charlie’s coworker at the grain mill.
  • Bob entrusted his friend Charlie with $10k of Alice’s allowance in case Charlie should ever need it.
  • Charlie trusted Darlene with $2k of his allowance from Bob.
  • Bob has a chance to review the expense, and if he thinks Charlie is colluding with Darlene, he could freeze their allowance, but for now he trusts his old friend, and snoozes the notification.
  • Alice doesn’t bother herself with notifications of expenses less than $10k, so she doesn’t get a message in this case, but she regularly reviews the feed of transactions that her vast network of delegated wealth is enabling.

The Road to Cooperation

If this seems fanciful, it should. People have tried to build similar systems before, and given up, proclaiming normal people would never be willing to participate in such a complicated system. I would emphasize that while people may be stubborn learners, we can also be brilliant designers, who lower the barrier to entry, and make new things like this accessible.


Exploring the frontier of human collective empowerment via technology.

Dan Finlay

Written by

Decentralized web developer at ConsenSys working on MetaMask, with a background in comedy, writing, and teaching.



Exploring the frontier of human collective empowerment via technology.

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