Our joint paper, with Lariosse Kouakou, Matthias Löwe, Philipp Ratz and Franck Vermet, entitled “Collaborative Insurance Sustainability and Network Structure” is now available on Arxiv,
The peer-to-peer (P2P) economy has been growing with the advent of the internet, with well known brands such as Uber or Airbnb being examples thereof. In the insurance sector the approach is still in its infancy, but some companies have started to explore P2P-based collaborative insurance products (eg. Lemonade in the U.S. or Inspeer in France). The actuarial literature only recently started to consider those risk sharing mechanisms, as in Denuit and Robert (2020) or Feng et al. (2021). In this paper, describe and analyse such a P2P product, with some reciprocal risk sharing contracts. Here, we consider the case where policyholders still have an insurance contract, but the first self-insurance layer, below the deductible, can be shared with friends. We study the impact of the shape of the network (through the distribution of degrees) on the risk reduction. We consider also some optimal setting of the reciprocal commitments, and discuss the introduction of contracts with friends of friends to mitigate some possible drawbacks of having people without enough connections to exchange risks.
2 thoughts on “Collaborative Insurance Sustainability and Network Structure”
kudos to your advert and responsibility, in my view to your update, risk education from an expert is important to avoid damages when contract is involved etc. note also that, risk education is primary whereas insurance is secondary. thanks
Collaborative insurance may be in its infancy, but the potential is huge. Thanks for the link to the research. What in your opinion are the critical steps required for this to be a success?