How many times have you felt like the concept of insurance was unfair to folks who faithfully pay their premiums, but never file a claim? The people filing claims are paying,roughly, the same amount in premiums as you, but they are getting their money back and sometimes more.
Would you believe this problem has something to do with how Mediterranean merchants were known to share the risk of losing ships at sea AND Facebook?
For practical reasons, modern insurance companies replaced the informal risk taking pools based on the honor system. Everybody is all too familiar with the expensive premiums, fraud, incomplete information on policyholders, and the moral hazards of coverage, etc associated with modern insurance companies.
Peer-to-peer insurance may be a solution to the incomplete information on policyholders issue which is a requirement for policy holders who share risks and cost at same insurance company. So instead of paying an insurance company to analyze the risk(the job of an actuary) of somebody they really do not know, how about grabbing that information from your “friends” on FB? It does sound a little risky for those who sell insurance to be completely reliant on the accuracy of social media “friendship data”.
I don’t know to what extent FB could release that type of information to start-up companies trying to hook up groups of similar insurance interests. A concrete example would be all pit bull dog owners who one would expect to generally pay higher insurance premiums for their four legged companion who is portrayed in media as being vicious. Perhaps a start up company interested in creating different insurance groups could just cull through all the FB data with a crawler similar to the one Google uses. This would obviate the need to get FaceBook’s permission. I may be missing something technically here about getting to the valuable “friendship data” stored at FB. One has to be logged in to FB to get to personal data I believe, so it may turn out that FB will grow their business yet another way by becoming a mega insurance provider for thousands of similar risk customers! Sounds like it might be time to increase social media positions in your investment strategy.