With COVID-19 still sweeping through many emerging markets, the MiN webinar on peer-to-peer (P2P) responses to the pandemic was a timely reminder of how mutual assistance models can help under-served populations deal with health and other risks. P2P essentially brings people together to protect each other - going back to the roots of insurance using a model which shares risks among the group, rather than transferring them to an insurance company.
Tang Loaec, President of P2P Protect, began with an overview of the hierarchy of insurance needs - including health, death and invalidity, loss of income, travel and rental bookings, and transport - and how they differ in mature and emerging markets. In mature markets, for example, hospitalisation and medical costs are mostly covered by insurance, unlike in many emerging economies. Looking at the provision of COVID-19 insurance worldwide, Tang said that even with the data changing every day, it is clear that Southeast Asia is leading the way - especially in China, Thailand and Singapore - with Europe playing catch-up. There are three reasons for this, he said: Southeast Asia is where the pandemic began; the region has experience with previous scares such as SARS and so was more prepared; and medical insurance cover in those countries was more patchy so there was a greater need.
Looking specifically at China, where more than 60 health insurance products have launched since the outbreak of the virus, Tang pointed to three examples of COVID-19 P2P insurance. Because these are mutual aid models, they are not subject to the same regulation as regular insurance and so are able to be more agile in coming to market. It’s a similar story in Thailand, where more than seven million policies have been sold by 30 companies within two months of the outbreak. However in Japan, which tends to have slower, more risk-averse regulation, only one COVID-19-specific product has been launched. Moving to Italy, Tang said that Datafolio are launching D3P insurance, backed by funding from the EU, which aims to be “a new way to insure ourselves, based on solidarity & mutual assistance”.
P2P insurance is a global phenomenon, said Tang, founded on communities, new technology and trust. Scale is also important - you need a minimum of 1,000 policyholders to ensure risk is well spread, and above 10,000, you have something which is really robust. “Once you reach 1,000, you know you are on a trend which can go much higher.” P2P benefits a wide range of people in different economics groups - depending on the type of insurance on offer. Some are attracted by the financial benefits, but others are motivated by solidarity. The most successful examples have been those which cater for very underserved large groups - P2P tends to be less expensive than regulated insurance models.
Tang then moved on to explain why P2P is relevant in the context of the COVID-19 pandemic. Traditional insurance models make it difficult, if not impossible, to define upfront an adequate level of premium - there is no coherent set of data to forecast the infect rate; there are inconsistencies between countries in reporting fatality rates; government policy decisions have a significant effect on mortality rates; as do the behaviours of both individuals and communities. P2P insurance, on the other hand, could be more appropriate because communities can accept variability of costs based on the spread, and the insurance itself can be a means of educating members and shaping responsible behaviour.
In the case of the OMAVI - a P2P Protect health and life insurance platform for Africa which is in development with an expected launch date of 2021, Tang said that although in the first instance it is designed for COVID-19, it could be used to cover other epidemics, such as ebola or measles. It will be simple and affordable, aimed at unbanked communities who use mobile payment wallets, and will allow members to choose from communities by gender or by age group, encouraging them to be actively involved by inviting others to join, or by becoming a mediator or checker. The mobile dashboard is designed for clarity and transparency, with simple, quick claims approval - 90% of claims will be automatically approved in less than a day - and the app will also allow members to see what payouts have been used for. This approach, said Tang, has a strong element of allowing people to shape products and to choose the type and extent of coverage - a democratic-based model of insurance which requires strongly involved members in order to shape it.
The full recording of the webinar is available to the public at this link.