Will P2P Insurance Replace Traditional Insurance?

Will P2P Insurance Replace Traditional Insurance?


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In 2019, Alibaba reinvents healthcare thanks to a P2P insurance model which has been a huge commercial success with more than 100 million users in China.
Despite commercial failures of most P2P models (B2C) attempts in Europe, Alibaba proves that P2P model still has a strong untapped potential.
Our intention in this paper is to test through a laboratory experiment if individuals can trust P2P insurance for damage coverage as much as they trust traditional insurance.
In our experimental design participants were exposed to different risks of loss and had for each of those risks the possibility to choose between coverage (either with traditional insurance or with P2P insurance) or no coverage.
In order to design the P2P insurance solution in our experiment, we took inspiration from a real commercial solution named Yakman which proposes a new type of P2P insurance model (B2B2C).
We first explored if individual characteristics, such as social preferences and risk aversion, or risk characteristics (value of the good exposed to the risk of loss and probability of loss) can explain the preference for P2P insurance.
Then we tested through a specific treatment the impact of an informational nudge (corresponding to more precise information provision) on the probability to choose P2P insurance rather than insurance.
Finally, we also investigated if the popular belief which suggests that P2P insurance can only be attractive when proposed to preexisting groups sharing affinities has real foundations.
Our results reveal that individuals have no trust issues with P2P model.
In fact, on average, P2P insurance even appears to be the most frequently chosen option over our different risks of loss.
As expected, our informational nudge appears to have a strong and significant positive effect on the probability for participants to choose P2P insurance.
Last but not least, our results reveal that P2P insurance hasn’t to be proposed exclusively to preexisting groups in order to be attractive. This popular belief advocating that P2P coverage can’t be attractive when the risk is spread over strangers is then shown to be unfounded.

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