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Social insurance At a Glance
Group purchases of insurance allow users to form groups around common insurance needs. Social Insurance acts as an intermediary to negotiate better deals from insurance companies for these group purchases. Several models of social insurance are described, including premium pooling, online insurance networks that connect seekers and investors, and decentralized autonomous organizations using blockchain and smart contracts. Overall, social insurance leverages peer communities and technologies like platforms and algorithms to provide more customized insurance policies at lower premium costs.
Social insurance At a Glance
- 1. Group Purchase § Users form a group around an insurance need § Social Insurance acts as an intermediary to nego6ate with insurance companies to get be:er deals for group purchases § The insurance needs for group purchase are usually niche needs Model Descrip2on Structure Players 1 Premium Pooling § Users form a group around an insurance need § Each pays a premium which goes into the common pool (depending on the model, a part goes to fund the group’s insurance policy) § Most models include nego6a6on with insurer § Claims are validated by the peer group and paid out of the common pool (depending on the model, big claims would s6ll go through tradi6onal insurance) § Groups with no or few claims get a bonus at the end of the period 2 Online Insurance Networks Tradi2onal Insurer Social Insurance Premium Pool $$$$$$$ $$$$$$$ Insurance premium Claims / Claims-free Bonus Big claims Online Insurance Networks Social Insurance Tradi2onal Insurer Nego6ate Insurance Premium Commission Market- Place § On the model of P2P lending, the model aims at connec6ng insurance seekers and investors § Applicants get a quote for a base policy, and can customize the coverage (with impact on premium) § Premiums are grouped into a pool § Outside investors invest money to back that pool, making up the required capital reserve. They get profit from the extra funds leS in the pool aSer all the claims have been paid out 3 Decentra- lized Autonomous Organiza2on § Applica6ons approvals are automated and fully transparent, relying on peers feedback § Premiums are held in escrow thanks to a smart contract, and are used to pay claims – one that they are validated by the peers § The model can use policyholders’ social capital to replace risk underwriters § As an example, supplementary unemployment insurance can rely on LinkedIn as a reputa6on system: applica6ons and claims are approved by social network peers, relying on LinkedIn status 4 Insurance Seekers Outside Investors Premium Pool $$$$$$$ $$$$$$$ Pay insurance premium Invest $ to back the pool Claims Extra funds leS in the pool Premium Pool $$$$$$$$ $$$$$$ Smart Contract PlaXorm Insurance Seekers Pay insurance premium Automated & Transparent Claims § Social Insurance stands for peer-to-peer mechanics applied to the insurance business, leveraging the power of peer communi6es, but also on social networks or blockchain principles § It is enabled by technologies such as digital plaXorms, scoring algorithms or smart contracts § The concept answers the users’ needs of transparency, empowerment and a common goal of lowering the premiums while benefiZng from a customized insurance policy WHAT IS SOCIAL INSURANCE? HOW IS SOCIAL INSURANCE CHANGING INSURANCE? CHAPPUIS HALDER & Co. Never miss out on the latest innova2ons in Financial Services with www.fintank.net