GlobalData: Lessons to be learned for innovative insurance propositions built on peer-to-peer model

GlobalData: Lessons to be learned for innovative insurance propositions built on peer-to-peer model
15.11.2017 11:28 am

GlobalData: Lessons to be learned for innovative insurance propositions built on peer-to-peer model


UK insurtech and pioneering brand Guevara announced in September that it had closed down, creating a shockwave and offering lessons to be learned for innovative insurance propositions, particularly those built on a peer-to-peer model, according to GlobalData, a leading data and analytics company.

The company failed to establish a fully capitalized underwriting vehicle. The business was formed in 2013, an early entrant into the UK insurtech scene which has only become established in the last few years.

It grouped customers together, who pooled premiums and received refunds if any capital remained unclaimed at the end of the year. It also created an app that collected data from the scene of an accident.

Ben Carey-Evans, General Insurance Analyst at GlobalData, commented: “Perhaps the difference between Guevara and other start-ups trying to lay roots was that it targeted the motor insurance sector, where many customers still feel more comfortable trusting established brands.”

Equally, on the back end, the motor market brings difficulties around profitability and costs for potential capacity providers.

Most peer-to-peer insurers have looked towards gadgets and niche personal lines, as they are less costly if a claim is made.

Lemonade is the most well-known peer-to-peer insurer globally – focusing on contents cover – and has received $60m in equity funding.

Carey-Evans continues: “The insurer pledges to give any money not used to pay claims to charity as part of its pledge to change the face of the insurance industry, and that may have set it apart.”

The health sector has also seen the emergence of peer-to-peer insurance. Companies can group people with niche conditions and offer policies that would be either hard to find or extremely expensive in the mainstream market. So perhaps there wasn’t an obvious enough gap for peer-to-peer motor insurance in the UK.

Existing examples suggest there is a space for peer-to-peer insurance as long as the market and message are right.

Related to this, where Guevara’s concept has fundamentally run aground is the acceptance that the insurance industry is not a space in which – including for ‘unicorn’ start-ups – a new business can make progress without buy-in from incumbent capacity.

Carey-Evans adds: “Brilliant concepts and winning rhetoric focused on a new generation of insurance proposition aside, ideas have to win industry approval as well as customer hearts. A warning for peer-to-peer propositions is that Guevara seemingly fell short, or touted ideas the industry is not quite ready to accept.”


Related News

iPipeline Expands Quoting Capability via SolutionBuilder®

iPipeline – a leading provider of next-generation solutions and services to the life and pensions market – has announced that they are further expanding quoting capability via... Read more »

Cyberwrite named a 2018 Cool Vendor in Insurance by Gartner for its Cyberrisk profiling technology

Cyberwrite today announced it has been included as one of only four vendors in the 2018 list of “Cool Vendors in... Read more »

Startupbootcamp InsurTech brings insurance industry together to celebrate end of third accelerator program

Startupbootcamp InsurTech yesterday celebrated the end of its third annual program... Read more »

Co-op Insurance Signs New Application Management Contract with Sopra Steria

Sopra Steria has today announced a new application management contract with Co-op Insurance. The master service agreement (MSA) provides not just Co-op Insurance, but all... Read more »

SSP Creates New Efficiencies with Integration of iPipeline’s SolutionBuilder

SSP, a global provider of technology systems and solutions across the entire insurance industry,has integrated iPipeline's award-winning SolutionBuilder® quote and apply system... Read more »

Former MIB Head Chooses SSP for New Venture

PEX Insure, the managing general agent (MGA) founded by Byron Shepherd, has chosen two separate SSP platforms to distribute its insurance products. Shepherd was formerly one of... Read more »

Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App