Friday, December 2, 2016

We bet the hurricanes and earthquakes and the bad drivers

The global insurance industry is worth nearly $5 trillion, and insurance companies are at risk of losing a share of this valuable market to new entrants. That's because these legacy players have been even slower to modernize than their counterparts in other financial services industries. This has created an opportunity for a group of firms known as insurtechs. These startups are leveraging new technology and a better understanding of consumer expectations to increase efficiencies in the insurance industry. Some are helping incumbents deliver better end products, while others are directly competing with legacy players.
Simple enough. I have to think it over.  But the insurance company wants to bet the number of hurricanes in the gulf, then just cover those. It needs a probability distribution of land fall conditional on housing value. Then show everyone the map, and tell them the game. The insurance company allows homeowners in the zone to bet their risk, or down load the app to do it.  The insurance company distributes the proceeds according to damage.  But a surplus runs into the next season.  The insurer gets a fixed fee from the surplus.  A low probability disaster allows smooth bankruptcy of the insurance company.

The hurricane insurance business is ripe for a phd weather guy to set up. But the game is all about educating folks about their risk because of he homeowners get it right, then you get a long term insurance business.  But focus on a specific type of risk that every homer owner of a class understands, like hurricanes in the gulf, tornadoes in the mid west.  When the purchaser knows what he is buying, then all the lights go amber, that means a long term stable insurance business.  It is like selling auto insurance to hood drivers.

Doable, all 4T of it, especially with Secure Smart Card, think of the honesty involved in driving insurance, while remaining anonymous.  The card ID keeps you anonymous, but you use it as an authorization, allowing the insurance company to get an anonymous measurement of your driving tickets. Your own personal identity remains anonymous.

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