Insure with friends. Groupon and Living Social are already capitalizing on social media. They offer deals or handpicked experiences that can be shared with friends. You can use your social network to get lower prices for services. This could be the new trend in business.
Social media like Facebook is used to stay in touch with friends, and others who work, study and live around them. Twitter is an information network that connects you with the latest information about what you find interesting. Businesses connect with customers quickly to share information about products or services. These are just a couple of the web based platforms and technologies that enable you to interact with other people online. So what is next?
I found a German company called friendsurance, which lets you manage your own insurance claims amongst a select group of friends. You can create communities of up to 15 people who can help cover an insurance claim in case of an accident. Each person in the group contributes $50-100 to help cover a fellow member’s claim. When the claim exceeds the amount the group provide, friendsurance covers the rest of the claim.
The benefits to the members are up to 70% lower costs than their competitors. Many smaller claims are handled without the insurance company which reduces administrative costs and lowers premiums for the policyholders. Since your friends are handling the claims, you will be more concerned with quality of the replacement or repair and the associated costs. Fraudulent claims would be reduced because claims are handled by a trusted group of friends. They are offering home, liability and legal insurance. Could auto coverage be next?
What is the insurance company doing? It seems they are shifting some costs and risks to the consumer! If you are willing to put together a group of your friends and do some work, you will save money. The risk is limited because the insurance company will pay after a level of expenditures by your group of friends. It sounds almost like a deductible that is satisfied by a claim. They are using the same theory of raising the deductible to lower your premium costs for insurance. Does this sound like something you would try?
This is an intriguing idea! I could put together a group of friends that I select and save money. Hmmm! I would put together friends that I have known for years who do not have insurance claims. In the case of automobile insurance, I would find friends who drive safely and do not have accidents. The insurance company is counting on my ability to reduce the exposure to my group of friends and ultimately to the insurance company. Sounds like a win/win!! My group of friends is pretty good at getting high quality services or products at lower costs. Do you think friendsurance is trying to attract these kinds of customers?
Is this social networking or engineering? Since I could benefit from this selectivity, they have my interest. Would I go through the trouble of putting together a group to save money? It depends a great deal on how much I may save in premium. If this works, what is next? Social networking is changing business. Social networking is already used for marketing and empowering the consumer. This could be the next step! What do you think? Insure with friends.
Photo by: webtreats
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That is an interesting concept. I think I like it but you would have to pick your friends very carefully. Home insurance would worry me unless the friends are geographically diverse although I guess the company is a backstop. And would you raise your friend’s insurance rates if he/she kept making claims even if legitimate or simply drop them altogether. Interest concept like I said.
Unless your friends are neighbors or live i a high risk area, you should be okay. Since I live in earthquake country (California), I would make sure they live elsewhere to qualify for earthquake coverage. Although is there a safe area? Tornadoes, floods, and who knows what else is hitting everywhere! The original article did not address that, however like most insurance the group takes the increase.
I don’t know if I would have my friends on a group insurance policy…but if it lowered my premiums, I might consider it.
I’d be interested in learning more about it. This is the first that I’ve heard of friendsurance.
Currently, it is only offered in Germany. Supposedly, the premiums are 70% lower than other companies. The concept of selecting my own group is intriguing, but there are risks involved in doing business with friends.
Wow, this brilliant!
You could build a great derivative of this in the US, where self-employed/uninsured people could created a group online for health insurance. Seems like it could be wildly profitable. There are a lot of states that will let you form an insurance group easily–some even let you create a group of one so that you can get group rates. If you could automate the process, you’d be rolling in money!
Of course, you could always steal this model too. This is a fantastic idea. Great post.
I think health insurance is a much greater risk because there are a lot of issues that are uncontrollable. Besides 15 would not be a large enough group. Can you imagine telling some friends that they are a high risk and could not join?
Whoops, I didn’t make much sense. I meant that you could make a site where people could join together to form a group to buy insurance at a group insurance rate, not one where the group would self-insure itself. Health insurance would definitely be way too costly to self-insure.
That wouldn’t be fun to tell a friend that they were too costly to insure, but for the younger demographic that is less likely to have insurance, I’m thinking that they’re generally pretty healthy. I mean, I could come up with 10 healthy friends in a few minutes who I could pool with. Either way, this social insurance idea is a brilliant concept from the bottom up.
You bring up an interesting issue. Young people do not buy insurance because they do not use it or feel it costs too much. It would have to be pretty cheap or required to get them to buy.
Group Health Insurance is the first thing I thought of when I read this too. There are all kinds of handymen, small business owners, etc that would easily be able to form a group to purchase health insurance. I don’t know why it has to be so hard here.
I think it is coming, but it would take a larger group to make it work. Perhaps, grouping by interests, profession or something else may work for medical insurance.
I think health insurance is a much greater risk because there are a lot of issues that are uncontrollable. Besides 15 would not be a large enough group. Can you imagine telling some friends that they are a high risk and could not join?
I think the idea of group buying is very powerful and we will start to see more of these types of models in the future. Why not? Businesses have been doing it for years to gain purchasing power, so now that social networking has made it easier to connect like-minded individuals there is no reason why we can’t all be taking advantage of group discounts.
Group on uses group buying, this may be the next step. Grouping with friends is still very early in the process.
Hmmm, I wouldn’t want to chip into an insurance pool with a bunch of friends. All it takes is for one friend to submit a claim that someone else finds superfluous or fishy, and blam — instant fighting among friends. Best to keep money and friendships seperate.
You may be going against the tide of social networking! The concept seems interesting, but I would be very careful of who I would want in my group. I think it may cause more problems with the ones I would exclude.
Groupon concept has really taken off and more companies are using this and financial services companies are also taking notice. I’ve heard that real estate brokers are also offering $1,000 rebate to the potential homebuyers through Groupons.
The more companies like Groupon that come into the market and succeed will influence the marketplace. It certainly will change how we do business hopefully for the better for consumers.
That’s an interesting concept- group insurance. The Groupon concept has really really taken off- everyone seems to be starting one up. Though Groupon isn’t actually profitable right now (unless the sell it of course).
I think we are seeing a trend! It should be interesting where it goes. Social networking is here to stay and I expect it will strongly influence business now and in the future.
The idea is intriguing but it takes a lot of trust. I’ll be looking to see if the idea expands.
That is one of the reasons,I would be very careful who I would include in my group. This is a double edge sword because you have to tell a friend they are too big a risk.
Agreed. I love my friends but I know they can be crazy drivers and I also don’t want to hurt anyone’s feelings by telling them I don’t want them in my insurance group! lol
I think that would be very awkward! I think social networking is going to influence how we do business in the future.
That insurance company from Germany sounds really interesting. Social media will lead to a whole new way to market to people.
I think you are right! I think it will take some time for people to accept and embrace the changes though.
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