Stokvels are a “a type of credit union in which a group of people enter into an agreement to contribute a fixed amount of money for to a common pool weekly, fortnightly or monthly” (Andrew Lukhele, NASASA). The common pool is may have various purposes including insurance against adversity such as death (burial societies), as well as equipping them with the financial muscle to fund various other functions agreed upon by the stokvel as a collective, for example loans to needy members, education and other physiological needs such as housing, grocery shopping and business endeavors.

From the above definition, it is clear that stokvels are already used for peer-to-peer funeral insurance. Peer-to-peer insurance, enabled by the internet, expands on the coverage available for small groups to include insurance classes like home contents (e.g. Friendsurance), auto (e.g. Hey Guevara), mobile phone (e.g. CommonEasy), bicycle (e.g. CycleSyndicate), income protection (e.g. Broodfonds) and coverage for all one’s insurance excesses (e.g. PeerCover) etc. In some cases peer-to-peer insurance is  replacement for insurance, in other cases it compliments insurance.

So will digital stokvels aka peer-to-peer insurance succeed? Riovic is taking the charge in South Africa - the home of the stokvel, many others are independently launching in other countries.

For more information, see

• List of peer-to-peer insurers
• Unpacking the potential of South African traditional saving schemes
• Stokvels - Wikipedia

​Some have argued that peer-to-peer insurance should be like peer-to-peer lending, i.e. creating a market place where the buyer and sellers of loans can come together, or in the case of insurance, a market place where the buyer and sellers of insurance risk can come together.

But is a new market place really being made? Assessing credit risk and then securitising the loans so investors can buy them is nothing new. Banks have been securitising loans for many years now e.g. mortgage-backed securities. Arguably banks are performing an additional service of diversifying the loans first which peer-to-peer lenders do not do.
Insurers too are not new to securitisation, 'insurance transformers' have been around for a while.  Interestingly, the marketability of securitised insurance risk is normally limited to catastrophic risks - normally because of the complex influence of underwriters and difficult to compare terms and conditions.

For both securitised loans and securitised insurance risk, buyers tend to be highly sophisticated i.e. hedge and pension funds, other banks or insurers. In fact, it was only when ‘the crowd’ such as local municipalities starting investing in these types of securities that things started going wrong i.e. the GFC. So these models have don't favour micropreneurs.

So should these market places be called ‘sophisticated buyers’-to-peer loans or insurance instead of peer-to-peer, maybe peer-to-peer is something else, or as Forrest Gump says - maybe it’s both.

PeerCover is looking to accelerate its success by applying to ​The Global Insurance Accelerator.
If successful PeerCover will receive:

• $40K seed investment in exchange for 6% equity. 
• 100-days of on-site (Des Moines) development support and time on stage at the Global Insurance Symposium 

As part of the application process, we've been asked to submit two videos

1. a team video
2. a product video

​So here they are:

1. These loans tend to be open-ended (no/informal repayment agreement)
PeerCover does involve any repayment. Everyone wins if no-one in their Peer Group claims, if someone claims then everyone loses - but only by a small amount.

2. Loans repayment have different priorities for lender and borrower
Since PeerCover does not involve any repayment, this is not an issue. Because your claim is managed through PeerCover we ensure that it is dealt with promptly. 

3. It’s Difficult to Ask for the Money Back
With PeerCover you can withdraw your balance at any time. If a peer has successfully claimed then your balance will be less than your original deposit. As long as you have a balance it is at risk but you also get the benefit of the cover (which is a multiple of your balance).

4. It Can Make Family Gatherings Awkward
If your family or friend is reckless and crashes their car, things should be awkward. Peer pressure to be a good driver / look after one's phone etc is a good thing. We believe people will have peers in their Peer Group who they think are reasonable i.e. 'good risks.' even if they have the occasional honest mistakes / genuine accidents.

5. The Borrower Becomes a Servant to the Lender
Upon a successful claim, amounts are gifted i.e. PeerCover not involve any debt between peers. 

6. The Borrower May Ask for More
The maximum you can lose is your deposit and you and your fellow peers are at no obligation to drop more into the hat.

7. You Enable (financial problems) Instead of Help Your Friend or Family Member
Morale hazard ("insure & ignore risk") is less problematic for PeerCover compared to insurers. Whilst insurers use fine print, PeerCover's approach is based on fairness. If the Peer Group believe a claimant was reckless, they can deny (by majority vote) that claim. 

8. These Types of Loans Don’t Earn Interest
True, your PeerCover deposit doesn't earn interest but by buying less insurance you do save. If you take you insurance saving per deposit, you may find that PeerCover can provide a nice return on equity.

9. You Might Need the Money
With PeerCover you can withdraw your balance at any time.

10. You Could Lose Your Money and Relationship
Addressing each item separately:

• Sure you may lose your deposit but remember with insurance you will lose your premium.
• PeerCover provides independent advice as to whether we think the claim should be paid to reduce disagreements. Further, vetoing PeerCover's recommendation can only occur by majority vote, so it is not on any one peer. We think PeerCover will help strengthen your relationship as your Peers can help you through your claim e.g. who is a good panel, where can I get my phone fixed for a good price. 

This list keeps growing every day, so I thought I might start keeping track.

The below are in order of launch date. Arguably, Friendsurance is the first tech p2p insurer as the history of small mutuals goes a long time back in history (e.g. the start of USAA, Lloyds etc) If you hover over the icon you will get the organisation name and launch year, click and it will take you through to the site.

If you are interested in the p2p insurers who are yet to launch, there are more details here.

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)

As reported in stuff some parents are at risk of having their insurance policies cancelled and claims declined, because of they take out insurance for themselves and a teenage driver, pretending they will be the main driver of the vehicle, when in fact their child will be behind the wheel most of the time. This practice known as fronting is an attempt to make insurance affordable for the whole family.

Instead of fronting, families can make insurance more affordable by cost sharing the excess. If each family member takes a higher excess, premiums are lower for everyone, there is less chance you will need to get an insurer with their fine print involved and their is greater social pressure to be a good driver.

Cost sharing can get complicated, so we have made it easy at PeerCover:

• We ask everyone to make an upfront deposit so there is more certainty that the money will be there when you need it
• Your payout is based on a multiple (normally 3 times) your balance
• Cost sharing of claims is pro-rata based on each person's balance
• We provide an independent view to reduce the chance of disputes
• You can withdraw at any time (noting that your cover will also decrease)
• Each person is still free to decide who they insure with and what level of excess and hence cost sharing they want to take

For this service PeerCover charges $100 per claim paid (shared amongst the PeerGroup), so if there are no claims, there is no fee.

If you would like to form a PeerGroup for your family, contact PeerCover or if you would like to join an existing group join-up today.

Crowd sourcing p2p insurance startups aim to return Insurance to its roots - see this A.M. Best article (also shown below) 

People who appear in this video include:

• Meg Green, Senior Associate Editor​, A.M. Best Company 
• Fred Eslami, Senior Financial Analyst, A.M. Best Company
• Tim Kunde, CEO, Co-Founder, Friendsurance
• Chris Logan, Director, Peer Cover

IAG Labs and Good Shepherd Microfinance have launched Insurance 4 That in Australia. Insurance 4 That is  single item insurance which makes insurance affordable by not gold plating cover nor providing insured limits which are too high. Protection is available for items including:

• White goods
• Electronics
• Medical devices
• Furniture
• Musical instruments

​
In New Zealand, PeerCover is offering affordable zero-deductible single item cover. Currently we offer Gadget cover for electronics but we can expand this should you require. PeerCover is a bit different than insurance

• your payout is based on your deposit (no premium)
• if your PeerGroup has no claims, you don't pay anything
• if your PeerGroup has claims, the cost (including claims handling fee) is shared pro-rata amongst the PeerGroup

So if you are looking for single item cover in New Zealand, sign up to PeerCover today.