The sluggish financial environment strained customers to make a conscious attempt to look for better deals (thanks to deal comparison sites). Likewise, increasing trust among users for transacting online has boosted the growth of the partaking economy (P2P model). Similar to how Lending Club offered lower rates for loans by eliminating the middleman, FinTech startups around the globe are looking at ways to lower insurance premiums by means of technology.
Let’s look at some of the solutions which are already in the market or will be launching soon:
Friendsurance: Friendsurance’s approach towards insurance is completely new. The company has implemented the concept of online peer-to-peer insurance which combines social networks with well-established insurance companies. Customers can connect to form individual insurance networks, thereby lowering their annual insurance premiums by up to 50%. Founded in 2010, the Berlin-based Friendsurance currently operates in the German market.
InsPeer: InsPeer allows users to share insurance “deductibles” with their friends and family members. It allows users to select the people with whom they plan to share the deductibles. The deductible is the amount of expenses that must be paid in case of a claim before an insurer pays any expenses, and it can add up to several hundred euros. The service is completely free if there are no claims. In the case of a claim, InsPeer keeps a small percentage of the claim paid by the insurer. This seems a good approach as they work with the insurers rather than going against them.
Guevara: Guevara focuses specifically on car insurance. At first, customers have to pool their premiums online. The difference between Guevara and any other insurance is that the unclaimed premium at the end of the year stays with the group and can be used to lower the price of their insurance the next year. It seems like a fair system as customers can choose their group, which means they will include only those drivers whom they trust. However, people can also find other groups on the platform which they can join. A group needs 10 members to buy a policy, but 20 members to be fully functional. The company is currently active in the UK.
Uvamo: Uvamo plans to launch its service by the end of this year in the US. The company aims to provide property and casualty insurance online. Uvamo works as a marketplace where both insurance seekers and investors planning to invest in the insurance sector come together. Uvamo leverages technology and replaces the traditional middleman, thereby providing lower premiums to policyholders and attractive risk-adjusted returns to investors. Uvamo leverage online data and technology to quickly assess the risk of the desired insurance policy and assigns appropriate premium. Externals investors profit from whatever unclaimed premium is left at the end of the year after all claims have been paid out while Uvamo gets a small share from the leftover. The key challenge for Uvamo is going to be the obtaining of licences from different states in the US as different states have different laws in the country.