Social insurance? Naw.
For my book, I’ve been thinking about a few industries that I think are impervious to social, Google-age, web-2.0, VRM goodness; we are bound to hate them.
Take insurance. I can’t see any way that I’m going to see insurance as a social experience. Jeremiah Owyang went looking and came up pretty much empty-handed.
The problem is, of course, that the insurance industry is built around getting us to take a sucker bet. Indeed, it’s a bet we want to lose. Nobody wants to have a legitimate reason to collect collision, fire, flood, health (apart from preventive care), or certainly life insurance. Worse than Vegas, we know that the industry stacks the odds against us; that’s the essence of its business and it is open about that. If we don’t collect, we are losers (we’ve lost our money) — and we we do collect, we’re still losers. The industry has to treat us like liars, only reluctantly giving us back the money we paid in. They make it all overcomplicated so we don’t know just how screwed we’re getting and so we make more safe (for them) bets. But we can’t afford to do without them. Insurance is our hedge.
So can you imagine what insurance 2.0 would look like? I can’t. I can imagine that we use social tools to gang up on the insurance industry, to, for example, create groups to take advantage of their rules or to decipher fine print for each other (but that’s really the antiinsurance). Could I imagine a truly cooperative, social insurance company where we insure each other — microinsurance? Frankly, no. There’s too much mistrust involved, too much suspicion of gaming and fraud; that negates the possibility of a system of social trust. Is there any point in having a MyAllstateIdeas, a la MyStarbucksIdeas, to work collaboratively with insurance companies? No. What am I going to suggest — make less and charge me less? Am I going to invent new products to give them money? (Gee, maybe I should insure my blog.)
No, I think our relationship with an insurance company is necessarily adversarial and one of mutual mistrust.
I come to the same conclusion about the law. Can you imagine the 2.0 lawyer? I can’t. They, too, are adversarial by definition.
So two questions: Could you imagine insurance 2.0?
And what other industries are similarly impervious to the possibility of our collaboration and affection?
April 26th, 2008 at 9:20 am
Think bigger, Jeff!
20 Korean families pool finances and open businesses one at a time… each member of the group has a huge incentive to help each business succeed, so they can get the money when it’s their turn.
Imagine insurance being created in a coordinated fashion, with each member of the coop working to decrease the risk of everyone in the pool.
Or in smart products that come with their own insurance because they’re so much better and talk to each other. When cars know where they are and where trouble might be, or when they integrate with each other and their drivers and the roads and the police, shouldn’t insurance get better? Isn’t coordinating the community and their payments and their actions exactly the sort of thing that could dramatically lower the cost of insurance?
And while some may not like it, what happens when 23 and me gets a lot smarter and the healthiest gene pool starts their own life insurance coop?
April 26th, 2008 at 9:32 am
Seth,
(I was just reading your words from the Union Square Ventures session on peer production, trying to think through network and platform value. You were talking about network creation as a form of marketing… Kismet…)
Cooperative business, I get. Better risk pools, I get. Better products that reduce risk and thus insurance costs, I get.
Isn’t that all an effort eliminate or reduce insurance, the risk and need for it? I’m all for that. But I think that does become the anti-insurance, no?
April 26th, 2008 at 9:46 am
Or to put it another way… One of the ideas I”m exploring is that almost every company can benefit from becoming more collaborative, social, 2.0, etc. But there are some that can’t. And they will likely face efforts to use these tools to destroy them. In some cases, people will do that because a company is not smart enough to retool for the new world (see classifieds customers going to craigslist because newspapers tried to hold onto their revenue streams and became the less effective marketplace). In some cases, though, I think the company or industry is incapable of itself embracing these tools. That’s what I’m saying about insurance. That’s why I think what you’re talking about — and I heartily agree — is the use of these tools for anti-insurance. No?
April 26th, 2008 at 10:26 am
Seth, sounds like a very risky activity, I’ll bet (and could prob ally dig up real numbers from work) that when it comes to money, consumers trust banks far more than they do peers.
Jeff, another industry to scrape at is the Finance and Medical industry. I’m asked frequently enough by clients to discuss Finance+Social but we often talk about the same ol’ examples, Wells Fargo, Chase 1, Intuit. Outside of that small innovation circle we don’t see much adoption.
Same with Health care, no real ‘groundswells’ of change.
Lastly, I know there are several candidates using social media for marketing, but we’re just starting to see movements of governments using these tools to actually change action.
April 26th, 2008 at 10:28 am
[...] it may be successful, it could likely be behind the firewall, impervious to public viewing. Update: Jeff Jarvis is also on the hunt for industries that are somewhat impervious to social media, I’ll agree, social media isn’t great for [...]
April 26th, 2008 at 10:49 am
Actually, I think you touched on why insurance might be very web 2.0-able.
Insurance, as you pointed out, is a glorified betting market. At present, insurnace providers offer odds against certain outcomes - adverse outcomes - and we pay up the stake. The similarity between insurance providers and bookmakers stack up easily.
Bookmakers’ control over odds and premiums have been shattered by betting exchanges (betfair jumps to mind), which offers more markets, usually with much smaller premiums (a 2 per cent ‘take’ rather than 6 per cent from the bookies is common).
For some types of insurance - and eventually more - there’s little reason why similar exchanges couldn’t be made. The facilitator may have to take a slice, in order to have some validators in the process, but there’s no built-in reason for ’social’ insurance to fail.
In fact, it could work quite well.
April 26th, 2008 at 12:53 pm
James,
Brilliant. So you’re saying that by opening up risk to a transparent marketplace, we undercut insurance margins.
I still don’t know what to do about fraud, though. Are you saying that policing that just a cost that is built in? So the social part of this is not that I have a better relationship with those intermediaries but that there is an o pen market of risk that gives me a dividend? People aren’t arbitraging my risk (or I’m arbitraging insurance companies’ risk)?
The problem, of course, is that my economics of getting a payoff on my own beats my motivation of wanting the cooperative marketplace to win, no?
Jeremy,
I’ve thought the same about health but I have a few ideas I will be exploring, at least around i nformation.
Finance I’ll have to think about.
I do think there is an opportunity for the social venture fund.
April 26th, 2008 at 1:09 pm
I personally believe … p2p Banking and almost all financial instruments will be social. The metaphor Society is the bank will exist truly.
In the immediate future .. I think social aspects can be used …. verticals where information from the society is useful - those industries will benefit.
As Seth rightly pointed out … we need to think bigger. As any customer for insurance - the new web (i wouldn’t call it 2.0!) helps information to flow easily from both ways i.e insurance to customer + other parties involved.
Imagine a scenario where everyone has a mobile and everyone is insured. You have an accident. I send out a SMS telling I had an accident. My cell phone provider knows my insurance and location. It immediately informs the insurance provider and also sends an sms to the nearest relevant hospital and people besides me to know more about the accident. … Everybody gains to benefit. Better and faster claims. People can take photos and send to the company - peple who help document the process could get paid in the process! The scenarios and advantages are endless. And at the same time - competing insurance provider could advertise and offer something better!
April 26th, 2008 at 1:28 pm
Seth and Jeff, there are still hints of this in the mutual insurance companies, although intense regulation and huge size have greatly diluted it. I recall when I first got my auto insurance I recall it was effortless to qualify despite being young. They just said, “Oh yes, your family has been with use for two generations.” I doubt that this still survives today’s underwriting and non-discrimination regulations.
April 26th, 2008 at 1:29 pm
Jeff
You’re right, fraud is a significant issues, but much less so in some markets than others. Let’s suppose we have insurance versus burglary - by requiring the crime to be reported before paying out, ‘insurers’ (those betting against the adverse event) have some measure of security.
Risky, or trusting, insurers could offer worse ‘odds’ with less requirement for proof in the event of a claim. By treating insurance as any other betting market, we’d effectively be insured by many small stakeholders.
Cleverer yet, the marketplace could take a cut of premiums in some markets (say 5 per cent?) and use this to audit a random percentage of claims, for particularly risk-averse insurers, or for markets particularly sensitive to moral hazard.
As you identified, the strength of such a system isn’t particularly reliant on a greater level of trust between the parties involved, but by a far wider and more transparent marketplace. It’s using the technology and theory of social networks rather than the trust built by them, I suppose.
Health insurance would certainly take some thought. But then again, I’m in the UK, so not a problem for me personally
April 26th, 2008 at 3:05 pm
A few months ago I got a facebook message from a friend of a friend saying that the friend’s bicycle had been stolen, which was very bad news because it was the second time in a couple of months and hence wasn’t insured conventionally because the premium would have been too high.
It turned out that the friend of the friend had contacted all the friends’ friends. She’d asked us all to message back if we would be willing to put in £20 for a new bike which would then be presented as a surprise.
Sure enough, easily enough friends messaged back to buy a new bike, transferred the money, and the bike was bought. This all took less than a week - which is an awful lot shorter than a similar claim would take through an insurance company. Less paperwork too.
Obviously it’s not practical in many situations and there are lots of issues about the strength of individuals’ networks but it got me thinking that there might be something in ’social insurance’.
April 26th, 2008 at 3:13 pm
I did some consulting work for one of the biggest insurance companies a couple of years ago and I was impressed by the degree to which their business was based on understanding of people, their behaviours and the ways of the world - all very social and all potentially very Web 2.0.
I spent a couple of days with them working through the issues of social computing and I need to check back how they are getting on. Their initiative may have been dragged down by the inertia that so many experience in big orgs but there was certainly a high degree of willingness to give it a go.
April 26th, 2008 at 3:39 pm
Jeff,
In their original forms, most insurance companies would have been recognizable as precursors to social networks. In developing countries, many of these organizations exist in their original forms such as the Mutuals. In South Africa, an even simpler structure, Stokvels (like credit unions) enable communal savings. This is really the same thing, in many ways, as savings were sometimes given to members experience an emergency versus someone saving up to fund a new business for example.
To James’s point on betting and odds-making, do you think groups of people who know one another might outperform actuaries in assessing risk? Do you think it would be easy to defraud a network of people who know each other via friend of a friend type connections?
One of the other primary issues has always been how the groups cash would generate the best return. Well, they could place the same bets as insurance funds and would probably do just as well, using index funds, in many cases.
My guess is that “remutualized” insurance + index funds might find a great fit with Web 2.0 tools. And you could still look to Web 2.0 tools like stockpickr to let you figure out how to organize the investment side of the house.
- Shaun
April 26th, 2008 at 3:48 pm
Shaun,
There’s some very interesting stuff in what you say there - ever come across “The Wisdom of Crowds” by James Surowicki? Essentially, a group - even without personal knowledge - will likely estimate more accurate odds than one ‘expert’ (there are some conditions, but no reason they aren’t met in these cases).
When it’s someone’s personal social network, then even better. Essentially it brings the social side back in to the sort-of dehumanised betting market I talked about.
April 26th, 2008 at 4:05 pm
One value of social/Web 2.0 tools to insurance companies is internally. The companies tend to be very big, spread out, and silo-ridden. In part thanks to a lot of M&A.
Building community internally can be really useful in improving relations between teams and with management, as well as a boon for knowledge management and productivity. At least I’m starting to see evidence of that at the insurance company where I work. (I’m in Canada.)
We started piloting those initiatives within our tech group last summer, and the mandate actually came down from management. No grassroots necessary. That said, I think they’re using it as research for potential external applications, which I don’t think will help that much, since internal uses and communities are very different from external. And I know the external implications scare them. (I think it’s in good part due to a lack of understanding at this point.)
I’m also finding it interesting that industries that appear at first glance to be least suited to social media would also appear to be industries that the average consumer hates the most.
(The whole “the tools would be used to destroy them” angle…)
Oh, and the Cooperators here in Canada is one example of an organization that started out as a community collective.
April 26th, 2008 at 6:22 pm
Hi,
Mutual Insurance has been around for a while. Web 2.0 can bring better communication among its members, and make it more efficient and cost effective for its policy holders.
Here is more about mutual insurance from Wikipedia:
http://en.wikipedia.org/wiki/Mutual_insurance
Regards,
Subhankar Ray
April 27th, 2008 at 4:36 am
[...] Social insurance? Naw. Jeff Jarvis goes looking for examples of things which don’t work under Web 2.0 models, and finds several - notably, insurance. (tags: jeffjarvis insurance law web2.0) [...]
April 27th, 2008 at 6:04 am
You are right Melanie, I am working for Life insurance in Canada and I see it in the same way. Web 2.0 tools created new types of relations and restructured the way of working a lot. However, I have the feeling that we are still lacking much of these knowledges, when comparing with US and the way how they use secial networks…
April 27th, 2008 at 7:21 am
I think Seth Godin nails is: we need to think bigger. Especially in terms of what web 2.0 is, less in terms of social, more in terms of its economics - community, networks and markets as economic dynamics.
Focus should therefore be on markets, and not industries, and web 2.0 as economics that disrupt markets and make them cooler and more efficient. This is where the more exciting implications lie.
MySpace, through networks, radically changed music as a market (and the dynamics within), less so as industry, and in fact in ways that ultimately make traditional industry players “less relevant”, gradually obsolete and lame i.e. a disruptive change, at a market and economics level, then forces a shift at an industry level.
Google changed the market rules of advertising.
Etc…
April 27th, 2008 at 7:48 am
I think all insurance is essentially a co-operative activity. In the same way that mutual societies and co-operative societies are all social, so insurance is a social contract. We all put in a bit and the ones who need it draw down from the pool. Sure, we privatised the management of it, gave away the profit, turned it into a huge scale business.
In the same way savings and loans (or building societies in this part of hte world) are social organisations.
So we need some imagination, some ambition and some skill to build these back again as social communities.
Sure, we can never reinvent the small local communities - but online gives us global micro-communities that can build insurance funds between them
April 27th, 2008 at 8:19 am
I have to disagree with you: Maif is a French insurrer, originaly for teachers, well-known for caring — their ads (and their behaviour) rely around “A check in a month time won’t help you find a baby-sitter now if you just broke your leg.” Beyond the hype, the service is great: nothing fancy, but convenient: if you need a professional and you lost your wallet, they’ll call and you won’t have to pay (right now).
Their premia are above average, but they have lower rates for young, students and poors. How can they make it? Thanks to an implicit contract: when you get richer, you stay with them not only for the service, but because you beleive in their way. And they are not publicly owned, but rely on a non-profit structure.
Conversation is made possible with real help-lines, and in case of non-emergency questions an “activist” on call. I’m not sure it is Web 2.0 as such, but it is ver dufferent then what you describe — I think they have group-buying catalogs, though.
April 27th, 2008 at 8:21 am
It is only for-profit insurance that is a problem, the firm needs to keep more than it pays out. We have two examples of non-profit insurance and they work quite well: Social Security and Medicare.
Once the profit motive is removed then there is no reason for the insurance company to game the system, all they need to do is balance the income against the payments by setting rate schedules for both appropriately.
In other parts of the world social insurance is even more widespread, it just isn’t regarded as insurance. For example, in those countries that offer free higher education funded by taxes the “winners” are those who go to college, while the “losers” are those who don’t. To balance this are other programs where the reverse might be true. For example the less highly educated might tend to be unemployed more often and thus collect more unemployment insurance.
If done properly, on average, everyone gets out an amount of service proportional to what they put in, but in those cases where they suffer extreme harm they collect more. The cost to each individual to cover these instances is small.
In this country the rich see paying into a universal pool for social services as an infringement of their “right” to become as wealthy as possible. They fight this by opposing taxation in general and on them specifically (such as with the estate tax).
Why selfishness is now seen as a virtue in the US is something I’ll leave to the social scientists and philosophers to explain.
In an earlier period we had mutual insurance companies and mutual savings banks. The idea was clear, there was not to be a profit. Until recently most Blue Cross/Blue Shield health plans were non-profit. In a deal typical of the tenor of the times they were converted to for profit by paying a small bribe to the government (in the case of NY about $1 billion). The result is as was to be expected. When non-profit, Blue Cross paid out about 94% of premiums to subscribers. This has now dropped to about 72%. The difference it the profit and high salaries of the bosses. For comparison Medicare pays out about 97% of premiums. The head of Medicare is a civil servant. The head of United Health Group made $1.3 billion.
Who has gained from this? Certainly not the public. There are just some areas where the profit motive is not the best way to provide services.
April 27th, 2008 at 8:54 am
Robert,
Though I’m very much in favor of Social Security and Medicare — not to mention universal health care coverage — I do think you’re going with a rather Marxist analysis — I don’t intend anything loaded in that — and ignore the problem of recipients and providers gaming and defrauding the system and the problem of bureacrats gumming up the works. I think you’re essentially right about cooperatives as a solution but I also think you’re glossing over the problems that rise there, too: namely, greed, fraud, and evil from all sides. If we all lived and contributed according to our means and needs, well, Russia wouldn’t be run on oil riches today but on optimism and good will.
April 27th, 2008 at 8:55 am
[...] discussion going on in the post about social insurance below. Please keep it coming there. This is very helpful in my thinking for my book. Thanks, [...]
April 27th, 2008 at 9:47 am
Props to Paul & Ivan’s comments.
Historically, when people are free to assemble & associate, they self-organize insurance, cooperatively. Later it became the centralized, professionalized industry we know today. I predict there’ll be some kind of massive craigslistification of insurance by April 27, 2018. It’s about de-institutionalization — not from the government borg (social security), not from the corporate borg (AIG). The New Social [graph] Security. Decentralized, self-organized. Not just DIY, but DIO (Do It Ourselves). That the big theme for everything now. (posted here)
April 27th, 2008 at 11:14 am
Jeff:
How do so many countries in Europe (and Japan) manage to have extensive social insurance schemes without falling prey to the ills you worry about?
Presumably greed, fraud and bureaucratic inefficiency aren’t restricted to the US. Even Canada (which is much more like the US than states in Europe) manages to run a national health system without the problems you fear. It is not only cheaper than the US system, but performs better.
I’m not sure what you mean by “Marxist”, but we already have a bit of “from each according to his ability” - Medicare payments are not capped and there is talk of removing the cap on Social Security. The same thing could be said of our progressive income tax system. The EITC (earned income tax credit) is an example of “to each according to his need” as are the parts of Social Security not related to retirement (disability and survivor’s benefits).
I’m afraid that the common condemnation of government smacks more of ideology than of actual data. Medicare is much more efficient than private insurance and the VA (which is allowed to negotiate prices) is not only more efficient, but cheaper as well. (I’m excluding the recent deficiencies caused by the Iraq war - that’s deliberate mismanagement by Bush.)
On your next jaunt or international panel why not talk to a few people from Scandinavia and see what they have to say about their extensive social services.
I spent my career working for non-profits and the people in these organizations worked just as hard and were just as motivated as those who were presumably motivated by profit. I’m sure you see examples of this at CUNY - passionate faculty who will gain nothing personally if their student’s do well in life.
Government man not be good an entrepreneurship, but it can provide standard services better then firms that are looking to cut corners. If we are seeing a rash of mismanagement and corruption at the federal level these days, that is because of a failure in our democratic system. The elected officials are seldom called to account by voters and act accordingly. When 94% of incumbents get reelected do they really need to listen to the concerns of voters?
The cure for imperfect democracy is more democracy. In the case of the US a good first step would be to get big money out of elections. The media is complicit in this since they are making a bundle from political ads and attracting viewers as they play up the horse race.
April 27th, 2008 at 11:33 am
One of the problems I see in health insurance today is our ambivalence (at least in the United States) to accept that people differ widely respect to both the costs and benefits. Some of that is inevitable (e.g., consequences of age, gender differences, genetic predispositions); some is not (e.g., smoking, diet, exercise). Also, different people may put a different value on their own health, which after all is not a binary good.
Given all that, it seems obvious that, in a market economy, if insurance is worth less to you than to me, then you won’t willingly pay as much for it as I will. If the price is fixed at X, then the people for whom insurance is worth less than X (in general, a lower-risk pool) won’t pay for it. If we force everyone to pay X, then we are redistributing wealth–quite possibly in a regressive way.
What I am saying is economics 101, and shouldn’t be at all controversial. Nonetheless, that common sense seems absent from most of the public debate about health insurance. Interestingly, other insurance industries (e.g., term life insurance) seem to have figured this out. What makes health insurance different? Do the moral dimensions of health and quality of life preclude rational analysis?
One of the phenomena I associate with Web 2.0 is that everything becomes a market (money, attention, etc.). It seems to me that Insurance 2.0 should be more tuned towards market reality.
April 27th, 2008 at 12:18 pm
If you really want to get into the details of the health debate I suggest you visit http://www.healthbeatblog.org/
The principle author, Maggie Mahar, is an authority on health finance, having worked as a reporter in the field for several decades and written two books on the subject. She also replies to comments, so if Daniel Tunkelang would like to repost his questions there, I’m sure he will get an intelligent reply.
April 27th, 2008 at 12:33 pm
web’o’sphere 2 point oh social networking will blow up insurance, because it will transparently link the whole system, insured, insurers, providers of the service that insurance is paying for
no place to hide, accountability everywhere, prices will drop, profits/savings more evenly dispersed
best thing that can happen
April 27th, 2008 at 4:34 pm
Many of the comments above mistake two of the very important aspects of a mutual insurance or banking system;
1) The customers are the *owners*. We hold the stock. We get the dividends. We vote for the board of directors. Profits flow back to us. This is an important difference.
2) These are situations where the customer chooses the vendor. Healthcare is different. With a few exceptions, the healthcare insurance buyer is a corporate or government bureaucrat. It is very rare that the patient has any choice in the insurance vendor or insurance coverage. The mutual insurance and banking have been in areas where the customer is the person insured.
Both of these make a huge difference in the motivations of the insurance staff, attitudes of both staff and customers, and the correspondence between customer expectations and insurance coverage.
April 27th, 2008 at 7:24 pm
Robert,
Thanks for the link. I took a look at Health Beat and found this (excerpted from http://www.healthbeatblog.org/2008/04/health-care-ref.html):
“The only way to avoid such inequality is to insist that private insurers offer everyone in a given community the same insurance at the same price. Young and old, sick and healthy, everyone pays the same price for the same coverage, and no one can be denied insurance because of pre-existing conditions.”
If such a system is mandatory, it can work–though it is, as I said in my earlier comment, a redistribution of wealth. We take this approach for education (though some people, usually those with more wealth, opt out and choose private schools); we don’t take this approach for housing (though the tax code favors regressively homeowners over renters).
Perhaps personal choice and individual freedom, which comprise the main objections to most national health care initiatives, are overrated. This is a libertarianism vs. socialism debate, and both sides have strong arguments.
In any case, it is certainly possible to take a one-size-fits-all approach. But it certainly doesn’t sound very “Web 2.0″–which is where I thought this discussion started.
April 28th, 2008 at 6:39 am
I think James RB’s idea works just fine, with a couple of tweaks.
Any investor in the p2p insurance market must also take all their own insurance through that market and no investor can join who is not also willing to use the market to insure their own risks.
It’s then in the interests of everyone involved for the claim validation process to be accurate and scrupulous. If your house burns down, you want your claim upheld; but if another member falsely claims their house has burned down you want their claim defeated.
In theory the response to that will be for all members to claim on day one that their houses have burned down. Get past day one and you’re in a stable situation where everyone is properly incentivised to reward honest behaviour.
April 28th, 2008 at 8:34 am
Here’s an important issue that cannot be overlooked for any of this to work in the US: At least on the surface, each and every scheme laid out above would either be illegal or would require a significant cash investment by the participants.
The first poster, Seth, has a great idea, but if anyone did it they’d wind up in court on about 30 counts.
The ongoing regulatory burden is enormous, too. And then there are the mandatory coverage issues (which really are part of the regulatory burden). For example, you can’t buy health care coverage in NY that does not provide chiropractic or psychiatric coverage.
You’d have to solve all first to make any stab at insurance 2.0 work.
April 28th, 2008 at 11:02 am
[...] Jeff Jarvis and Jeremiah Owyang are discussing the merits of social, web 2.0, VRM concepts in the context of [...]
April 28th, 2008 at 11:06 am
I think looking at the insurance issue only from the perspective of consumers is limiting. The real opportunity for insurance and other areas will be in the application of social media tools to achieve better business results. An example within insurance would be to connect adjuster, claims processing and consumers in gathering and settling claims more quickly. There could be many applications with larger claims impacting large groups of consumers where the sharing of information, ideas and solutions work for everyone’s benefit–dam–better for consumer, more efficient for insurer, etc.
April 29th, 2008 at 2:08 am
Jeff,
I’m late in the discussion, but I wrote a “Seth: think bigger” post about this problem.
It’s related to “people ranking” (as in google’s page ranking), whereas people’s insurance fee will be related to some sort of ranking in their communities. This ranking can then be matched against the (top-down) ranking you get from your insurance agency, offering you a more personalized monthly fee.
See also: http://www.ichoosr.com/blog/archive/peopleranking-what-do-you-think
Do with it what you like.
Cheers
Bart
April 29th, 2008 at 3:31 pm
Would there be a way to set up a “unused insurance credits” market? Analogous to the carbon credits market for selling unused pollution credits? So, if someone is healthier than predicted by actuarial table, they could sell off (or donate) their health insurance credits to someone else who needs them.
Apps would help manage the process by identifying the “markets” and helping manage them at very low incremental cost. Could even provide anonymity, so buyer and seller don’t know each other. Could reduce the cost of insurance by helping cut down the need to charge more to the older or more risky because the credits would be used only on an as-needed basis.
May 1st, 2008 at 1:06 pm
[...] Jarvis ponders whether Insurance is impervious to social reinvention. I don’t agree, but I think it’s [...]
May 4th, 2008 at 9:09 pm
All of the comments, including the original post, seem to gloss over the underlying motivation of any type of insurance: A hedge against risks that would not or could be covered by the policy holder.
To the extent that “insurance” is mandated by government on a state by state basis, I think its beyond the hope of help from Web 2.0 technology (just like political game itself).
To the extent that social intelligence may be able to *reduce risk*, I think the Web 2.0 technology may assist in the creation and distribution of “risk avoidance” knowledge. Most technology companies “self insure” (I believe) their employees for long and short term disabilities. They know that the profile of their work force allows them to mostly “avoid” the disability sucker bet.
On a personal level, if I had the knowledge and possession of a fire proof building, I would not need fire insurance. If I found a community that supported a walking life triangle (distance between work, home, and shopping center), I would not need car insurance. If community / alternative / genetic medicine supported average age up to 80, I may give up health insurance. If I knew how to avoid problem X, I would not insure against it.
May 18th, 2008 at 8:02 am
[...] BuzzMachine » Blog Archive » Social insurance? Naw. More on insurance and social media from Jeff Jarvis. I can imagine a leading insurance brand embracing social media and positioning itself as the transparent, accessible, innovative insurance firm — imagine that! (tags: insurance) [...]