Insurance in Today’s Sharing Economy: New Challenges Ahead or a Return to the Origins of Insurance?

Abstract

In the early twenty-first century, technology-based peer-to-peer (P2P) business models have been popping up, multiplying and succeeding. These business models set themselves apart from traditional business-to-consumer (B2C) models. This paper aims at identifying and outlining the new types of technology-based business models in use in the insurance sector. We began our quest in search of the new challenges to the law of insurance brought about by such business models and found ourselves face to face with some new takes on the oldest forms of insurance known to humanity. The new business models we have analysed can be broken down into three different classes: the broker model, the carrier model and the self-governing model. The broker model and the carrier model rely on traditional insurance players but allow customers to take on part of the risks insured by the group they happen to fall into or choose to adhere to and take back a portion of their profits, or at least make customers feel like they are taking on those risks and taking back such profits. The leading characters in such models appear to play, to a large extent, the same roles traditionally ascribed to insurers and insurance intermediaries. Whilst they may incorporate P2P elements, they are not, in essence, true P2P models. We deliver a brief outline of some of these existing models and provide a more detailed account of an example thereof: the entity best known as Friendsurance. We then move on to examine the self-governing model, where we believed the most innovative and challenging arrangements were to be found. We analyse the entity best known as Teambrella. After identifying the contracting parties in the self-governing model and their roles, our attention falls on the new challenges this model brings forward: do contracts entered into through these platforms qualify as insurance contracts? Should insurance regulation apply to them? These questions, we find, have been asked and answered many times over in the past. Hence our research ended up providing an excellent opportunity for a look back into the origins of insurance. We do not dispute the disrupting potential of InsurTech’s new P2P business models. From an industry point of view, they may well provide a very significant contribution to the revolution of insurance as we know it. However, from an insurance law perspective, our main conclusion is that for the most part the new business models are simply recycling and optimising the potential of some old recipes by applying them in a new, digital setting. Whilst the small scale of traditional self-help mechanisms proved too parochial to cater for the more sophisticated insurance needs, the digital revolution gave rise to a global self-help community, thereby providing the earlier self-help mechanisms with a new stage where they can compete with stock-based insurers on an equal footing.