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Personally, peer to peer insurance sounds like a gamble. As I understand it, insurance companies hire armies of actuaries to determine risk plus the risk is sp
by blogimus 18y ago
Personally, peer to peer insurance sounds like a gamble.
As I understand it, insurance companies hire armies of actuaries to determine risk plus the risk is spread out among many accounts, many make a little bit of money, some cost a bunch, but statistically makes a net profit. I suppose each investor would be his/her own actuary.
And how do you handle all that private personal information that insurance companies require from applicants to determine risk, like family history of cancer, just for one? or risky personal activities, like sky diving? Oh, and what about insurance fraud or moral hazard?
- evgen 18y agoYes, this one is a serious can of worms to be opening. In addition to the points you raise there is also the issue of re-insurance and regulation. If you can't get someone to cover your obligations if the odds come out against you then this is a non-starter, this is where re-insurers come in out in the real worlds and they aren't going to deal with a scheme this small so you will need something else to back your gambles. The insurance market is also heavily regulated because people actually depend on the services and the government sometimes ends up on the hook when these companies fail. To be completely honest, I can't see any way that this would A) be allowed to operate as a legal business, or B) not face some catastrophic failure down the line that actually hurts real people.
- blogimus 18y agoOne late night thought: something that could come out of this that is peer-to-peer, loosely interpreted, would be to have online peer groups to pool together resources to get better insurance rates, basically create your own social network group plan.