At the moment, in the Altfinance space, all of the P2P marketplaces are focused on lending and crowdfunding. It seems that a number of niche P2P lending models are making traction, namely in invoice factoring, student loans and the broader consumer lending through businesses such as Zopa and Ratesetter. I see the potential for dozens of niche P2P lending markets developing. There is always going to be some domain expertise required in understanding the risks of property loans or the credit risk for invoice factoring. It makes sense that there is a P2P market for each particular niche.
P2P insurance is certainly a sector that we haven’t heard much about, but I see P2P insurance as another type of niche lending market where the money being lent is the risk capital and the yield being the premium income.
The only model that I have found that operates a Peer to Peer insurance platform is Berlin based Friendsurance. Groups of friends can team together to purchase insurance – not much different to affinity groups you might say – however the key difference is that the a percentage of each person’s premium is set aside to cover the losses of the network’s initial £x amount of claims. The group is essentially self-insuring up to a “network deductible”, if the group’s losses go beyond that amount the traditional insurance kicks in.
Not only can this P2P insurance model disintermediate the capital side of insurance but it also reduces the claims ratios because people in a network are less likely to make a fraudulent claim.
It seems that P2P finance is finally looking like it might disrupt banking, perhaps P2P insurance is the next disruption!