Insurtechs in peer-to-peer insurance

The earliest form of insurance involved people pooling their resources into a common fund to compensate those facing specific losses like funeral expenses, which were relatively easy to prove.

Over time, insurance evolved to cover more complex risks involving numerous people, activities, and properties. This transition led to the need for an independent party to conduct risk assessment and investigate claims, resulting in the creation of contractual policies governing the process.

With technology advancing rapidly, peer-to-peer (P2P) insurance has become a reality in today’s world.

How does peer-to-peer (P2P) insurance look today?

In P2P insurance, policyholders contribute premiums to a shared pool, which is used to pay out claims when a member experiences a covered loss. Any surplus funds may be returned to members or donated to a chosen charity.

Advanced technologies like Artificial Intelligence and Blockchain enable the implementation of P2P insurance among a diverse group of individuals with varying needs and risk tolerances, while minimizing reliance on a central governing party.

Notable examples


Often hailed as the world’s first P2P insurance company, Lemonade utilizes a full-stack carrier approach, combining technology with a peer-to-peer business model to streamline insurance processes and deliver value to customers.

Through its platform, Lemonade has revolutionized the insurance experience, offering transparent pricing, quick claims processing, and a commitment to social impact by donating excess premiums to charitable causes.

To date, Lemonade is the only company that still implements P2P insurance. Others have tried implementing it once but with limited success, leading to their downfall (or lack of implementation thereof).

These include:

Friendsurance (2010)

Friendsurance, a groundbreaking German startup, disrupted the insurance landscape with its social network-based model. Users banded together with friends or family, sharing coverage and incentivizing risk prevention.

The online platform provided a range of policies, from electronics and bikes to household and liability, while offering users rewards for damage reports and claims.

Xiang Hu Bao

Introduced by Alipay in 2018, Xiang Hu Bao represents a milestone in online mutual aid platforms in China, boasting over 100 million participants. Its mission is to foster inclusive health protection, particularly for lower-income and rural individuals.

Members contributed approximately $4.25 annually which was deducted from their Alipay accounts. Coverage extended up to $40,000 for specific illnesses, with claims processed via blockchain technology.

The platform levied up to 8% commission from the claims pool, and complex cases were adjudicated by a jury comprising of platform members.

Teambrella (2015)

Teambrella, a Bitcoin-based peer-to-peer (P2P) insurance platform, seeked to revolutionize the insurance industry by eliminating the need for traditional insurers.

Founded by Russian entrepreneurs Alex Paperno, Eugene Porubaev, and Vlad Kravchuk, Teambrella allowed users to provide coverage to each other without intermediaries.

Users formed teams and contributed funds to a shared Bitcoin wallet, providing coverage for various risks. Claims were processed through a voting system, which incentivized honesty and transparency.

Final thoughts

The evolution of insurance from its earliest forms of communal pooling to the modern era of peer-to-peer (P2P) insurance showcases how technology and innovation can work together to create a disruption in the insurance space.

However, despite the promises of P2P insurance, several challenges persist. One major challenge is the risk of moral hazard, where insured parties may alter their behavior to take advantage of the shared risk pool.

Add to that, the decentralized nature of P2P insurance platforms introduces vulnerabilities to fraudulent activities like false claims or identity theft.

Lastly, regulatory compliance and legal complexities pose ongoing challenges for P2P insurers operating in various jurisdictions, as many countries still lack formal legislation to govern them.

Addressing these challenges requires continuous innovation, robust risk management practices, and effective regulatory oversight, the lack of which has seen many insurtechs like Friendsurance, Teambrella, and many others that made headlines in the 2010s failing to materialize results.

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