EXAMPLE OF A P2P RISK SHARING SCHEME WITH IMPACT
There is an insurance problem for the self-employed. There is no affordable insurance for them to solve their disability risk. They want full insurance on good terms and low cost during their working life. Solution: p2p risk sharing until retirement on mutually agreed terms and at least 60% lower premium than traditional insurance.
COMPARISON OF TRADITIONAL DISABILITY INSURANCE AND P2P RISK SHARING
Profession: Crane operator
Premium per month:
18 years of age: €159.71
P2P Risk Sharing
Profession: All professions
Payment pm at >80%: €2,000.00
Waiting period: 30 days
Premium due until cancellation
Premium per month at average 4%:
18 years of age: € 5.00
The current market situation shows that absenteeism due to illness is lowest among self-employed individuals, with a rate of 1.7 percent, while medium-sized and large companies have rates of 3.8 percent and 5.2 percent, respectively. However, self-employed individuals often cannot afford disability insurance, which they desire at good conditions and low costs throughout their working lives.
To address this issue, P2P risk sharing offers a solution that eliminates conflicts of interest present in traditional insurance structures. Millions of self-employed individuals can benefit from P2P risk sharing, which provides disability insurance with premiums that are at least 60% lower than those of traditional insurers.
Assuming an average absenteeism rate of 4% and a €2,000.00 monthly benefit per incapacitated person, the monthly payments for 100 risk sharing self-employed individuals are €8,000.00, with a premium of €80.00 per person per month. The premium is age-dependent, starting at €5.00 for an 18-year-old and increasing by €3.00 per year to €155.00 per month for a 67-year-old risk sharing self-employed individual.
In P2P Risk Sharing, there is no traditional insurer or reinsurer involved, ensuring that only the interests of the risk sharing clients are served. Premiums are used exclusively for claims, unlike traditional insurers where premiums not converted into claims are used for costs, profits, and taxes.