We are getting used to the sharing economy to an extent where the term uberization is becoming part of our vocabulary to refer to the effect of disruption in a given industry by some sort of peer to peer business model, which seems to defy the rules by which incumbents compete.
In the essence of this shared economy, motorized by peers connecting directly between them, is the concept of disintermediation.
Disintermediation in news: Twitter. Disintermediation in travel: Uber and Airbnb. In the financial services industry there are plenty of cases around lending and crowd-founding, leaving banks wondering if they have to (or will) participate.
Under this concept any industry where intermediation is heavily present should be looking into its next Uber
Insurance is no exception. Insurance is about risk sharing, so what better model to bring in technology and make that risk sharing as efficient and effective as possible?
Insurance started in many cases by peers getting together to offset the consequences of a loss. This reminds me the story, told to me by an old friend, about how underwriting was born at Lloyds bar in England when captains started betting against their own ships to cover the potential loss of their cargo and vessel. The bookie would take note of the bets entering them one beneath the other on the chalkboard, hence the term underwriter was born. I hope my friends underwriters, whom I have just assimilated to bookies, continue to talk to me after reading this.
Mutuals were created with this same concept of peer risk sharing. Risk management in the base of the pyramid has been found to follow the same scheme.
More recently a German broker introduced the concept using the power of social networks and group risk sharing: Friendsurance. By the way great case study by Mike Fitzgerald: http://www.celent.com/reports/friendsurance-challenging-business-model-social-insurance-startup-case-study.
In Colombia a very interesting initiative to take this concept even further: Wesurance, an initiative backed by Suramericana the leading insurer in Colombia looking to create groups of people to insure almost anything you want. Please check this video: https://vimeo.com/115970823.
Disintermediation by peers connecting between them directly, easily, efficiently, looking for those that share the same concerns (and risks) and being able to create a product as personalized as it gets. I don’t know about you, but to me it raises a lot of questions about how this will change intermediation in insurance as we know it and, much more, it raises the question of which is going to be the role of insurers.
Want a hint? Banks are slowly starting to embrace the adoption of P2P as part of their business models. Suramericana in insurance is doing the same.
My advice: get involved, try, fail, learn, adapt, and shoot for the moon. Even if you miss, you’ll land among the stars.
This blog entry has been republished with permission.
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