Blockchain technology and peer-to-peer (P2P) insurance model are reshaping the insurance landscape, according to the latest Peer2Peer Insurance Global 2018 that was released through ResearchAndMarkets.com.
The study defines a P2P insurance model as involving a small group of individuals or family members, or a small group of friends sharing the same interests, who collaborate to contribute to protecting each other's interest. Under the setup, each member of the insured assumes responsibility for the group's risk profile.
This makes members of the group or family sufficiently motivated to keep their risk profile at a minimum to get the maximum benefit for the rest of the organization.
“A new wave of peer-to-peer insurance using blockchain technology and self-governing models has recently emerged. Under the self-governing model, policyholders within the community collectively manage all insurance functions, such as setting policy rules, accepting new members, making and approving claims, and paying reimbursements,” the report reads.
However, the researchers note that there is a fine line that separates club memberships that provides insurance as inclusive in the association with true peer-to-peer coverage that offers retro or upfront premiums.
“The work done by traditional insurers - quotes, claims management, and administration can be handled by software and smart contracts,” the study states.
It also notes that more insurance companies now find themselves competing with P2P insurance models and startup companies.
“Insurers and brokers need to know it the threat is real or not - and if they can borrow ideas and learn lessons from the newcomers,” they said.
In July, professional services and management consulting firm Accenture partnered with The Institutes RiskBlock Alliance, a blockchain-oriented consortium to develop a production-grade system to implement the distributed ledger technology (DLT). The platform will allow the consortium to trial several use cases by the end of this year.