PEER-TO-PEER MARKETPLACE MODEL COMES TO INSURANCE

[jheizer]

http://wealthhour.com/peer-2-peer-lending/peer-to-peer-marketplace-model-comes-to-insurance/" class="bbc_link" target="_blank">http://wealthhour.com/peer-2-peer-lending/peer-to-peer-marketplace-model-comes-to-insurance/

Interesting idea.

[rawraw]

Typical insurance makes it's money on the float and not excess premiums.  I'm skeptical that this would be profitable enough for the risk. It is bounded by 100% loss, but one of those can eliminate lots of smaller gains along the way.  I'm not very proficient in insurance, but I view it as a fat tailed distribution.

[Rob L]

It might be an idea whose time has come; guess we'll see.
Looking at the team members I don't see a lot of in depth experience in the insurance industry, but lots of experience building the LC platform.
Is that the cart diving the horse?

[TravelingPennies]

I kind of had the same thoughts as rawraw.  What if anything will they do with the float?  I saw that the company itself basically acts as a reinsurance for the individual pools so that is good from a policy holder side.  Not directly capping total pool losses to just investor money and kind of has a bit of that company money in the game we wish LC had when it comes to collections.  Then again it could be 100% reinsurance they are buying and they don't so it would be the same.

The more I've thought about it though it is almost like a retail investor version of a catastrophe bond.  So really not that crazy of a new concept, just for the general pool of funds vs cat.

As far as risk, in an economic down turn we know LC loans will have rolling defaults over time, but if a hurricane, hail storm, tornado hits BAM, there go all the funds.  (Assuming homeowners/hurricane is a coverage they'll offer).  Guess it depends on how they allocate the pools.

Agents? Collections? Adjusters? But I guess I'm mostly just interested in what lines/coverages they'll offer.  Either way I don't think I'll be able to get myself to invest.  I know enough to know I don't want the risk personally and it directly competes against 1/2 our income haha.

[AnilG]

https://forum.lendacademy.com/index.php?topic=3275.msg29388#msg88888888Quote"> from: rawraw on June 27, 2015, 06:42:59 AM

[TravelingPennies]

Oh and how they will deal with/file with every state's department of insurance.

[TravelingPennies]

https://forum.lendacademy.com/index.php?topic=3275.msg1#msg1">Quote"> from: AnilG on June 27, 2015, 12:54:32 PM