“The Kite Runner,” a book by Khaled Hosseini, includes a quote "Afghan's cherish custom but abhor rules" So what is the difference between a custom and a rule, and what does it have to do with insurance? Read on..

1. ​A custom is a traditional and widely accepted way of behaving or doing something that is specific to a particular society, place, or time.
2. Rules are set of explicit or understood regulations or principles governing conduct or procedure within a particular area of activity.

Insurance it is a contract with explicit inclusions and exclusions. However insurers also require their customers to behave in certain ways - which is stated as part of their rules. e.g.  (i.e. disclosing all material facts otherwise the insurance contract) and warranties (e.g. obliges frequent inspections on insured rental properties). I think we would all agree that insurance is all about rules.

So what protection options are available for those who cherish custom but abhor rules? My view is the social aspect of donation based crowdfunding (a limited form of protection) brings with it an expectation of conforming to a widely accepted way of behaving - you are not going to raise any money for your personal crisis campaign if your crisis was a result of 'bad' behaviour.

But what is 'bad' behaviour? 'Bad' behaviour is more fluid than insurance rules and is largely determined by your peers who choose to either donate or not. Interestingly 'good' behaviour is important too, as this may increase the chance of a campaign going viral.

If you abhor rules, cherish custom but don't fancy your luck of going viral, then PeerCover's matched crowdfunding club may be worth a look.

ps The fact that the character Baba was an poor first generation US immigrant may also explain why he didn't have health insurance.

Good high level overview of the #p2pInsurance market from  and @

​Deloitte & Victoria University of Wellington School of Government having written an interesting report on how we can boost resilience in the face of uncertain shocks.

Uncertain shocks are broader than insurable risks and so require a broad set of tools. Beyond personal resilience (cash savings), the next layer of resilience includes:

1. support networks e.g. family and friends 
2. financial resources e.g. credits facilities and insurances

Other layers of resilience include employers, government and not-for-profits and cultural capital as shown in Deloitte's info-graphic below.

When these different sources of work together, we get something really powerful. PeerCover is a club which enhances the financial resources of our support networks. The club is in effect, peer-to-peer insurance - disrupting disruptions!

1. Feel awesome by crowdfunding life events - supporting your community and being supported by your community feels great; when was the last time insurance made you happy?
2. How much you get paid following a life event is determined by your friends and family who take into account your whole situation, not just legal/medical/insurance definitions. Insurance may under/over/not pay for your life event because it relies on setting fine print/sum insured before you even know what your life event is. 
3. The CCC payout scenarios are much broader than insurance because we use the wisdom of crowds
4. We are 100% transparent - we leverage Bitcoin and public crowdfunding campaigns - so you can see where the money is and flows. 
5. You get more back with CCC - typical life insurance payout ratios are 50 to 60 cents in the dollar, the CCC payout ratio is 95 cents in the dollar (the other 5 cents pays the club administration fee).

If you buy an umbrella when it is sunny, you probably are also a fan of insurance. However most people only buy an umbrella when it is raining and they see insurance as a necessary evil. The two approaches can be restated as: whether to prefund risk via insurance/savings or post fund losses via levies/borrowing? How risk/losses should or shouldn’t be shared is a separate question and is not addressed in this article but is addressed in this article.
 
So what’s the difference between prefunding and postfunding?
Prefunding obviously requires some estimating because when and how severe a loss will be is uncertain but less-obvious is that opportunity cost of investing in financial assets until monies are needed to pay for losses. Arguably prefunding is more forward looking, meaning there is a greater focus on risk management.
 
Postfunding is also a lot more transparent as the reason for the funding requirement is clear / there are less assumptions required. However, postfunding is less guaranteed because the source of liquidity may dry up when you need it following a loss. A liquidity shortage may be due to external events or the nature of the loss and the affect on you. One major benefit of postfunding is that there are less strings attached. Most insurance/savings scheme restrict payouts / how you can use the money. 
 
Some examples
Many discretionary mutuals and government insurers use a 100% postfunding i.e. subscriptions/levies are used to fund losses in the year rather than future losses where the underlying event occurred in that year. Donation based crowdfunding fits in this category.
 
Insurers offers a number of postfunding options to complement their core prefunding model. Examples include deductibles, co-pays, burning cost ‘premium adjustments’ and health savings accounts. 
 
Crowdfunding Cover is a genuine mix of both postfunding and prefunding. In return for regular risk-based subscriptions (prefunding), subscribers are entitled donation-matching of their life event crowdfund campaign (where donations are postfunded). An alternative name for this type of model is community coinsurance. What ever you want to call it – it is a entirely new way to finance risk. 

Take-away
Postfunding is a legitimate form of financing risk and is perhaps an approach you may very well want to consider.

Next weeks topic: Brexit, Borders & Scaling Startups (shared)

Any difference between #insurchat (Americas) and #insurchat (Europe/Asia)?
Same hashtag (#insurchat) only it is run 12 hours after the Americas session. The topics may be the same or can differ. The rest of world invite is orange whilst the Americas invite is blue.
​
Who's behind insurchat (Europe/Asia)? 
Currently sahoodk &  co-host the session but no ones really owns it - it is a collaboration of those interested in boosting #insurtech through sharing

Insurance policies are contracts, and like all contracts, many of the important items are often found in the fine-print. In the case of insurance policies, the fine print refers to the body of the contract where  and  are spelled out. (An exclusions is where the insurer won't pay, a sub-limit is where the insurer will only pay up to a certain amount for a specific risk and a limit is the overall maximum that an insurer will pay across all risks.)

Insurance companies limit their risk by specifying exclusions and (sub)limits. Looking for and understanding exclusions and sub-limits is especially important because they can be used to lower the premium of seemingly identical coverage from different companies.

Here’s an unsurprising fact: Very few people read the legalese terms of service contracts - less than one person in 1,000 (according to this Forbes articles). So what are people doing:

1. Some blindly trust the fine-print based on their view on the overall trustworthiness of the insurer
2. A common approach is to ask a friend who they buy insurance with, hoping they didn't use method 1
3. Other people rely on online social networks e.g. BoughtByMany makes this approach easier by identifying groups of similar insurance buyers such as those with Crohn's disease (for travel insurance), or owners of French Bulldog (for pet insurance) etc.
4. Or if you want an expert, you can always buy insurance through an insurance broker - they have a good knowledge of the differences in fine print and also how smooth the claim process is with different insurer. Of course you have to pay for this service either directly or implicitly through an commission.

What are most people are doing?

Of course you can do all of the above but you may still find yourself beholden to insurance fine-print when it comes time to claim. That is why we invented a Crowdfunding Cover: 

• broad supplemental cover to fill those gaps in your health/life/property insurances,
• minimal fine-print (see our T&C's) without the legalese/medicalese,
• your friends, family and others concerned about your welfare, decide how much we pay you

Get a quote today - it's cheaper than you think.

Who's behind insurchat: 
Currently  &  co-host the session but no ones really owns it -  it is a collaboration of those interested in boosting #insurtech through sharing

​​Next week's topic: Brexit, borders & scaling ​(29 June 2016)

Topics to date:

1. What's new in #insurtech (23 March 2016)
2. Online vs bricks & mortar (30 March 2016)
3. Startup playground, life, p&c, health - where do you play & why? (6 April 2016)
4. Virtual hugs in online insurance: building trust among thousands (13 April 2016)
5. Sharing success stories in #insurtech ​(20 April 2016)
6. Blockchain applications in Insurance ​(27 April 2016)
7. Wearable technology in #InsurTech ​(4 May 2016)
8. Beyond personal lines, #InsurTech for Business (11 May 2016)
9. P2P Insurance (18 May 2016)
10. Building an #Insurtech Brand (25 May 2016)
11. Facebook: Do's and Don'ts (1 June 2016)
12. Insurtech: Is anything off-limits? (8 June 2016)
13. InsurTech - Life (insurance)(15 June 2016)
14. Rules - Regulation & Workarounds (22 June 2016) 

Critical illness insurance (CII), otherwise known as trauma cover or a dread disease policy, is an insurance product in which typically pays out lump sum cash payment if the policyholder is diagnosed with one of a predetermined list of specific illnesses.

Rapid expansion of CII definitions however has lead some to associate this cover with playing the lottery or even a retirement plan (see "Trauma Insurance - Want to play the lottery"). This problem persists. One proposal is ​"life insurance solutions should be linked to impacts, not causation, and should provide benefits based on the claimant's outcome of an illness rather than just on the condition meeting a particular definition" - Gavin Teichner, general manager of individual life at Australian life insurer TAL

Diving deeper into medical or legal definitions to define further conditions or impacts is not the future. The world has changed. Peoples' trust in professionals, including doctors and lawyers, is at an all time low - so basing a insurance product around these professionals' decisions is a tough ask. Further, 'impact' is path dependent . For instance, there is a big difference between someone who has been diagnosed with cancer and another person, diagnosed with the same form of cancer but has also recently lost their job or even husband / wife. Can you really put your trust in an insurer to fairly make a call on how impactful your condition is? So what is a way to offer simple cover but still allow for impact?

Enter donation-based-crowdfunding. Donation-based-crowdfunding is being used by many to help fund costs of critical illnesses, severe injuries and even death. Because donations are made post event, donors can allow for 'impact' is a straight forward way. Unfortunately, most campaigns don't go viral, so you are dependent on your crowd - this often means only a small amount is raised. A crowdfunding insurance solution could remedy the shallow pockets problem by magnifying the amount raised - funded by pre-event regular premiums.

PeerCover is promoting such a solution (see how you can make it happen) but also offers a non-insurance approach based purely on gifting and transparency which anyone worldwide and take-up today. See here for more information.

PeerCover hasn't been successful to-date as publicized in this insurancebusiness article . There are a number reasons for this, which I thought I'd share with y'all:

1. We were't able to team up with an insurer to offer a comprehensive solution - so it wasn't a '1 stop shop'
2. p2pInsurance/sharing is easy to grasp at a high level but involves complexes at the more granular level. This is also true of insurance in general but people are starting from a better knowledge base for insurance. Complex products do not favour online sales.
3. PeerCover's marketing spend was small. Whilst we were able to get some publicity this was mainly to other insurance professionals/more international than the local public
4. Our UX wasn't great. We really should have built a reputation mechanism / allowed user to post profiles to facilitate sharing / forming groups.
5. It may also be a local market issue. The chch earthquakes/insurer bankruptcies & GFC/failures of shadow banking industry are still fresh in people's mind. So locally people are weary to try p2pInsurance/PeerCover

Of course we are addressing these issues - so we are down but not out.
Feel free to comment below or privately  with your thoughts.