A link between Collaborative Stakeholder Groups, Nobel Laureat Elinor Ostrom and insurance?

Local councils are increasingly seeking to use Collaborative Stakeholder Groups (CSGs) rather than councilors for low to medium level environmental decisions .

Cynically one could say this is a cost-cutting measure as  decisions are outsourced to CSGs who often provide their time on a voluntary basis. However, this would ignore a broader decentralization theme where decisions are being put back into the hands of the people affected by those decisions.

There are sound economic reasons for this new approach. For instance the Nobel Prize winner Elinor Ostrom eight "design principles" of stable local common pool resource management which effectively calls for the formation of CSGs.

So, should CSGs be just environmental specific? We think the same principles should apply to insurance. PeerCover follows the eight design principles:

1. Clearly defined boundaries (the PeerGroup and covered assets)
2. Rules around how shared resources (deposits) are shared in the event of a claim
3. Collective-choice arrangements (majority vote) to determine the validity of a claim
4. Effective monitoring as members of the PeerGroup are updated if a claim is received
5. Consequences for the violation of PeerGroup rules
6. Conflict resolution mechanism (independent recommendation provided by PeerCover)
7. Leveraging PeerGroups to effect better premium rates and fair claims treatment by traditional insurance companies
8. Layered structure (PeerGroup-Insurance-Reinsurance-Government)