We’ve seen peer-to-peer lending revolutionise the banking sector, and now a new product could be about to do the same for insurance in Australia.
Founded in Germany in 2010, Friendsurance is bringing peer-to-peer insurance to the Australian market. Its business model unites groups of customers (usually 10) to help cover each other’s small claims.
“Today there are at least 18 companies around the globe trying various forms of peer-to-peer insurance,” says Friendsurance Australia CEO Perry Abbott.
“The risks we are exposed to are different today than they were 20 years ago.
“Friendsurance wants to work with the insurance industry to offer customers new dimensions.”
Over in Germany, customers have access to cover for home contents, liability, legal expenses, car and electronics such as mobile phones.
The company’s Australian arm will launch its first product at the beginning of 2017, but for now is not saying which kind of insurance that will be.
Under the Friendsurance model, small claims are covered by the ‘group’ premium while the insurer still covers large claims. Customers only have to pay the initial premium, and receive up to 40% back if the group doesn’t make any claims. So you know that mate who’s always losing or damaging their phone? Maybe leave them out of your group for now.
With this and many other changes happening across the insurance market, customers should regularly check to make sure they’re getting the best deal around.
Among the trends happening in the insurance market, consumer network One Big Switch’s campaign director Joel Gibson highlights a growing demand for insurers to be transparent and share their data and pricing information.
“The benefits of data cut both ways — some car insurers want GPS to show how much and how fast their customers drive,” he says.
“There are also products that allow you to insure individual items for short periods of time rather than having to take a grab bag product.
“It’s not always easy to catch new trends and it can be unnerving being one of the first to try a new financial product. If trends catch hold, the big guys will start offering them as products.”
Research group Canstar says declines in car theft and property break-ins are having a positive effect on pricing for customers, but this is being countered to some degree by the impact of climate change.
Another thing that’s helping keep premiums down is cost savings from customers managing sales and claims online, says Canstar spokeswoman Justine Davies.
“It’s common for insurers to offer 15 to 25 per cent discounts on first-year premiums for new customers,” she says.
“General insurance is a very competitive industry and you can negotiate a sharp price. That said, you don’t want a cheap price if it’s a nasty policy. It’s boring, but read the terms and conditions carefully.”