- Email: [email protected]
Death of the premium: Future of insurance is people power
TECHNOLOGY
Peter Cade/getty
We’ve got you covered
currency Bitcoin and the payment network Ripple, which Peercover uses. Both charge an extremely small fee for processing a transaction compared with The future of insurance could be in people backing one another traditional models such as credit card companies, making payments as low as 20 cents feasible. Initially, Peercover’s focus is on building groups to cover small things like cellphones, and what Mimms calls positive insurance. This is where a group pays out when a member reaches an agreed goal, such as giving up smoking. But he has grander visions too, such as health insurance, where large groups of Peercover users could negotiate preferential rates for treatment. “The technology allows for the potential of collective bargaining in the negotiation of healthcare costs in which groups may band together to practise some of the bargaining techniques used by governments and traditional insurance behemoths,” Mimms says. Ellen Carney, an insurance industry analyst with research firm Forrester, says Peercover –Your peers will understand– points towards the future of insurance. “It’s very clever. This seen over the last 100 years,” says as calculated by Peercover’s model is at the historical roots of Hal Hodson Ron Suber of peer-to-peer loan algorithms. Someone insuring a so many insurance companies.” INSURANCE is an unfortunate fact company Prosper. “Peercover is $400 cellphone will pay a larger She backs the idea that of life. We pay large premiums to a great example.” proportion of a member’s claim Peercover has the potential to cover ourselves for bad events P2P insurance is simpler and than someone who is insuring change how health insurance that often never happen. But cheaper than mainstream a $100 cellphone, for example. works in the US, although there there is another way. An online methods. “People are paying Members who fail to pay are are obvious regulatory hurdles. insurance firm called Peercover profit and overhead to insurance ejected from the group and are “Health insurance in the US has lets groups of people insure each firms when they pay premiums,” no longer covered. a lot of problems. You could see other on their own terms and at says Peercover co-founder Jared The reason all this is possible is, that this would be an interesting a fraction of the cost. Mimms. Peercover groups don’t as with other P2P services, because alternative.” Insurance is the latest financial collect premiums. Instead, every of the rise of new ways to pay Richard Carter, CEO of financial service to get a shake-up from individual in the group has a software developer Nostrum “The amount you pay out peer-to-peer (P2P) dynamics. stake – each is both insurer and Group, says that data from for a claim is proportional Already, individuals can lend insuree. The group’s founder sets sources such as social networks to the value of the goods money for a return with interest. the initial conditions for that will play a role in a peer-to-peer you have insured” Similarly, people wanting to group, including what can be world. This won’t just be in the exchange currency can avoid insured and the maximum value form of finding friends to go in banks and instead use P2P services of an item. The payout for a claim online. “The kind of insurance with on coverage, but to judge to find other people looking to is split between all members but we’re interested in wasn’t possible unknown group applicants too. make the opposite trade. is only made when the majority a few years ago,” says Mimms. “It “Consumers need to learn that “The changes in financial of the group approve the claim. only became possible because of everything they put into the services that are happening now The amount you pay out is micropayments.” public domain is going to be used are happening more quickly and directly proportional to the value Behind micropayments are to judge them in future, whether dramatically than anything we’ve of the goods you have insured, breakthroughs such as the virtual they like it or not,” Carter says. n 20 | NewScientist | 21 September 2013
Peter Cade/getty
We’ve got you covered
currency Bitcoin and the payment network Ripple, which Peercover uses. Both charge an extremely small fee for processing a transaction compared with The future of insurance could be in people backing one another traditional models such as credit card companies, making payments as low as 20 cents feasible. Initially, Peercover’s focus is on building groups to cover small things like cellphones, and what Mimms calls positive insurance. This is where a group pays out when a member reaches an agreed goal, such as giving up smoking. But he has grander visions too, such as health insurance, where large groups of Peercover users could negotiate preferential rates for treatment. “The technology allows for the potential of collective bargaining in the negotiation of healthcare costs in which groups may band together to practise some of the bargaining techniques used by governments and traditional insurance behemoths,” Mimms says. Ellen Carney, an insurance industry analyst with research firm Forrester, says Peercover –Your peers will understand– points towards the future of insurance. “It’s very clever. This seen over the last 100 years,” says as calculated by Peercover’s model is at the historical roots of Hal Hodson Ron Suber of peer-to-peer loan algorithms. Someone insuring a so many insurance companies.” INSURANCE is an unfortunate fact company Prosper. “Peercover is $400 cellphone will pay a larger She backs the idea that of life. We pay large premiums to a great example.” proportion of a member’s claim Peercover has the potential to cover ourselves for bad events P2P insurance is simpler and than someone who is insuring change how health insurance that often never happen. But cheaper than mainstream a $100 cellphone, for example. works in the US, although there there is another way. An online methods. “People are paying Members who fail to pay are are obvious regulatory hurdles. insurance firm called Peercover profit and overhead to insurance ejected from the group and are “Health insurance in the US has lets groups of people insure each firms when they pay premiums,” no longer covered. a lot of problems. You could see other on their own terms and at says Peercover co-founder Jared The reason all this is possible is, that this would be an interesting a fraction of the cost. Mimms. Peercover groups don’t as with other P2P services, because alternative.” Insurance is the latest financial collect premiums. Instead, every of the rise of new ways to pay Richard Carter, CEO of financial service to get a shake-up from individual in the group has a software developer Nostrum “The amount you pay out peer-to-peer (P2P) dynamics. stake – each is both insurer and Group, says that data from for a claim is proportional Already, individuals can lend insuree. The group’s founder sets sources such as social networks to the value of the goods money for a return with interest. the initial conditions for that will play a role in a peer-to-peer you have insured” Similarly, people wanting to group, including what can be world. This won’t just be in the exchange currency can avoid insured and the maximum value form of finding friends to go in banks and instead use P2P services of an item. The payout for a claim online. “The kind of insurance with on coverage, but to judge to find other people looking to is split between all members but we’re interested in wasn’t possible unknown group applicants too. make the opposite trade. is only made when the majority a few years ago,” says Mimms. “It “Consumers need to learn that “The changes in financial of the group approve the claim. only became possible because of everything they put into the services that are happening now The amount you pay out is micropayments.” public domain is going to be used are happening more quickly and directly proportional to the value Behind micropayments are to judge them in future, whether dramatically than anything we’ve of the goods you have insured, breakthroughs such as the virtual they like it or not,” Carter says. n 20 | NewScientist | 21 September 2013