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The insurance industry and technology have gone hand in hand for quite some time. Insurers are always on the lookout for the latest innovations to adopt. They are constantly seeking out ways to lessen their exposure to financial risk through better customer assessment and by reducing their administrative costs through greater efficiency.

Life insurance companies, for example, are using social media for vetting customers. In fact, New York has already approved this practice as long as it does not lead to discrimination.

With the growing relevance of fintech, however, the insurance industry’s friendship with technology could become a love-and-hate relationship. Some applications of the recent advances in insurtech today might go against the best interests of incumbent insurers.

Out of all of the hottest fintech innovations that Fortunly mentions in their infographic, the two that could render the traditional insurance model obsolete are peer-to-peer (P2P) networking and blockchain.

What Is P2P Insurance?

Early P2P insurance platforms made it possible for small groups of people (with closely similar risk levels) to pay one another’s deductibles in order to help lower their individual premiums.

Then, small groups of people started pooling their money to jointly settle premiums and bear the risk of insurance together. If there are leftover funds, members of the P2P network get to split the money.

In both models, an insurance company is still involved. The organization, however, simply provides administrative services, charging P2P network participants a clearly defined fee.

How Does Blockchain Fit in?

Integrating blockchain technology into a P2P network allows its members to self-govern. Described as the third wave of the P2P insurance evolution, blockchain-powered platforms come with an escrow-type account, enabling each participant to pay a certain amount of money toward a distributed digital wallet.

The funds do not go anywhere until a member files a claim and gets paid. If the balance in the wallet is insufficient to cover a claim, the blockchain P2P insurance company will generally tap reinsurance to supplement the inadequate pool of money.

This model is not universal. Every P2P insurance company could alter some of its elements and introduce unique rules in order to ensure fairness among all participants and help eliminate moral hazard.

What Could Make Blockchain P2P Insurance Thrive?

High-tech P2P insurance models are still at their infancy, but they are showing a lot of promise. Their biggest advantages (thanks to blockchain technology) are reliability, transparency, and immutability of transactions.

Furthermore, P2P insurance platforms inherently have less overhead and are synonymous with streamlined processes. As a result, they translate to more savings for network participants and speedy payouts.

What Could Kill Blockchain P2P Insurance?

Blockchain-based P2P insurance models are not dead on arrival, but it may take a while before they could enjoy mass adoption.

The insurance industry is generally strictly regulated around the world. Like their traditional counterparts, P2P insurance companies must withstand governmental scrutiny if they are to enter and stay in the business for a long time.

The very legality of P2P insurance models may even be questionable in numerous jurisdictions right now. Although fintech firms in this space can eventually get a license to operate, they can’t expand as fast as they wanted.

Last but not least, the unknowns. Blockchain-based P2P insurance models are so young it is hard to anticipate all of the possible roadblocks to their success at this point.


Blockchain P2P platforms have the potential to repackage insurance products in order to promote reward and trust among network members. Traditional insurers, however, will not allow themselves to fade into oblivion without putting up a fight. Insurtech companies do have a mountain to climb, but they could flip the script on the traditional insurance model if they play their cards right.

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