What Would Google Do_ - Jeff Jarvis [110]
U.K. business journalist James Ball agreed with me that insurance is “a glorified betting market” where insurance providers “offer odds against certain outcomes—adverse outcomes—and we pay up the stake. The similarity between insurance providers and bookmakers stack up easily.” His comment added that open betting exchanges had shattered bookmakers’ control over odds and premiums and could do the same in insurance. “There’s no built-in reason for ‘social’ insurance to fail,” he wrote. “In fact, it could work quite well.” Ball was arguing, as I have many times in this book, that the power of open information will make markets more efficient. He gave me a dose of my own medicine and I had to agree.
But still, I argued in response, there is the issue of fraud: People try to rip off insurance companies and that can undercut communities and markets built on trust. Ball replied that fraud is less of a problem in some cases. “Let’s suppose we have insurance against burglary by requiring the crime to be reported before paying out,” he wrote. That requirement gives insurers a measure of security. He continued:
Risky, or trusting, insurers could offer worse “odds” with less requirement for proof in the event of a claim. By treating insurance as any other betting market, we’d effectively be insured by many small stakeholders.
Cleverer yet, the marketplace could take a cut of premiums in some markets (say 5 per cent?) and use this to audit a random percentage of claims, for particularly risk-averse insurers, or for markets particularly sensitive to moral hazard.
Ball said his insurance marketplace would use technology and the theory of social networks to rely on transparency more than trust. He concluded: “Health insurance would certainly take some thought. But then again, I’m in the U.K., so not a problem for me.” Rub it in, why don’t you, James?
Shaun Abrahamson, a friend and former colleague, piped in to the comments, pointing out that the original insurance companies, like credit unions, “would have been recognizable as precursors to social networks.” Then he pushed the social envelope in the discussion: “To James’ point on betting and odds-making, do you think groups of people who know one another might outperform actuaries in assessing risk? Do you think it would be easy to defraud a network of people who know each other via friend-of-a-friend type connections?” In other words, if a community insures itself, are there social disincentives against screwing friends and neighbors?
Ivan Pope, a U.K. web entrepreneur, echoed Abrahamson and told me my premise was wrong. Insurance, he said, is inherently social.
In the same way that mutual societies and co-operative societies are all social, so insurance is a social contract. We all put in a bit and the ones who need it draw down from the pool. Sure, we privatised the management of it, gave away the profit, turned it into a huge scale business…. So we need some imagination, some ambition and some skill to build these back again as social communities.
Scott Heiferman, founder of Meetup, also brought historical perspective to the discussion, writing a brief manifesto for change in the coming decade, chock full of hip blog references (the “social graph” to which he refers is what Mark Zuckerberg calls the architecture of personal connections on Facebook):
Historically, when people are free to assemble & associate, they self-organize insurance, cooperatively. Later it became the centralized, professionalized industry we know today. I predict there’ll be some kind of massive craigslistification of insurance by April 27, 2018. It’s about de-institutionalization—not from the government borg (social security), not from the corporate borg (AIG). The New Social [graph] Security. Decentralized, self-organized. Not just DIY, but DIO (Do It Ourselves). That is the big theme for everything now.
There is the great promise and power of the Google age: DIO.
In the end, commenter