Can decentralised insurance work without capital using sharing economy principles?

Can decentralised insurance work without capital using sharing economy principles?


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Speaker(s): Weihao Choo (Munich Re / Macquarie University)

The global sharing economy is growing rapidly in sectors such as accommodation, transportation, services and finance. Two key features of a sharing economy are (1) decentralised operation and (2) elimination of capital. For example, in the case of Airbnb and Uber, property and vehicle owners individually provide accommodation and transport services without a centralised ownership and management of property and vehicle assets. Does this mean that the sharing economy cannot be adopted by today's insurance operating model, where centralised institutions hold and manage large amounts of capital in order to bear risks and meet policyholder obligations?

In this presentation we discuss how future insurance can adopt sharing economy principles by leveraging on recent technological advances and innovations, changes in social attitudes and the growing millennial population. We will also discuss how this new insurance operating model can tackle longstanding problems such as the insurance gap in less developed economies, increasing regulatory burden and persistent insurance leakage or fraud.

We will cover specific topics such as:

  • Key features of a sharing economy, with examples
  • Decentralised insurance underwriting, pricing and claims management
  • Operating insurance without capital and dealing with shortfall issues
  • Bringing in existing technology such as Facebook, Airbnb and blockchain
  • Important benefits of the new insurance operating model
  • Adapting regulation to the new insurance age
  • How can actuaries be involved?

Whilst insurance cover for the sharing economy is already commercially available, the concept of decentralised, "zero capital" insurance is virtually unknown in academia and industry. As such this presentation is intended to provoke discussion, generate new ideas, and to prepare actuaries for a potentially new insurance age.

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