Forget about Peer to Peer, the future of insurance is invisible and parametric

By Jean-Charles Velge (Qover)

In a world of interconnected objects, insurance won’t be “social” as stated by the so called P2P innovators but rather parametric and invisible. The new disruptive P2 business models tend to irritate insurance purists: the fundamentals of insurance have always been about mutualisation of risk. The insurers are essentially an “escrow” account, and some of them already share their profits. In short, “P2P” sounds just like a trendy synonym for insurance. 

The ultimate objective is friction-less insurance: customers do not want to be bothered by insurance, it simply need to be there when they need it. 

Your driverless car of tomorrow should take care of getting the right coverage for you and your belongings while you are being transported. Once you step out, your smartphone will take over this hassle for you. Those connected devices will “invisibly” source the right insurance solution for you at any time, through a direct connection to a worldwide risk carrier: In other words, this is the concept of “Insurance-As-A-Service”. 

Claim settlement frictions will be eliminated through parametric insurance: the settlement is not the actual suffered loss, but instead a specific pre-agreed amount that is paid in case of the occurrence of a triggering event. The possibilities are infinite: your connected fridge in your kitchen will be able to automatically detect a failure, notify the default to your insurer and spontaneously trigger your warranty mechanism. 

Traditional insurers must change their fundamentals and shift to a whole new set of capabilities (Data Scientist, Blockchain, AI…). This is the InsurTech opportunity that will cannibalize the “front” part of the insurance industry. 

In the long-run, technologies will inevitably lead to the emergence of a world connected to a few giant risk carriers. It will not be about InsurTech anymore, but rather “Tech for Insurance”.  
 

About the author

Jean-Charles Velge is the co-Founder of Qover. He holds a master's degree of financial managment from Vlerick Managment School and an MBA from Hong Kong University of Science and Technology.