Friendsurance – First P2P Insurance Concept Launched

It was only a matter of time, that the p2p concept would be applied zo the insurance sector. Friendsurance does just that. You invite your friends and relatives, and they agree to cover part of the damage. In exchange Friedsurance claims that you can save up to 50-70% of the insurance costs.

At the moment Friendsurance offers general liability insurance, household contents insurance, legal expenses insurance and and cycle insurance.

How does this p2p insurance work?

Each of the invited friends will have to contribute 20 EUR in case an insured damage occurs. The remainder of the damage amount is covered by a conventional insurance.

Friendsurance says the costs savings are substantial since the concept:

  • prevents fraud
  • prevents misconduct (through social control)
  • eliminates sales costs
  • discourages claims for small damages
  • lowers administration costs

I am sceptical about the concept for two reasons:

  1. I very much doubt that anybody will want to involve friends and family in claims settlement, especially if his neglience caused the damage. It seems awkward for all involved.
  2. Currently there is only one insurance company actively offering lower rates (Friendsurance has set up a way for this concept to wiork via bonus payment even if the insurance company is not actively participating).
    The whole concept looks to me as if a comparison portal for insurance rates has been pimped up with a nice p2p story that helps in PR and marketing ā€“ but the main business model is to refer customers to insurance companies.

But Iā€™m willing to be proven wrong and will take another look in a year or 2 to see how Friendsurance develops.