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business models, strategies and technologies

Insurance moves from individualisation to the “group mind”

Danish company Gobundl harvests (well, harvested) the power of the “group mind” to rethink the traditional fintech focus in insurance

From individualisation to the “group mind”

One of the big “blessings” in our IT-driven, highly automated world lies in the degree of individualisation now available in so many goods and services. One of the key features of digital expansion is that the costs of making/processing one item/service are pretty much the same as for a thousand, via the joys of Googamazon elasticity and scalability.

I can order personalised items to satisfy my personal peccadillos as well as one-offs to meet my specs/desires and from anywhere in the world, rather than having to traipse into a bricks-and-mortar boutique and settle for what they happen to have and are willing to sell.

Individualisation becomes the new black, and suddenly it’s almost a natural part of our expectations.

Retrograde progress

That makes a new Danish insurtech (do we have to have supposedly catchy monikkers for everything!?) online platform with the somewhat misleading name Gobundl interesting – or rather the apparent mindset behind it.

In what seems to be an interesting counter-move to digitally enabled microtariffing, data-driven monitoring and individualisation, the basic Gobundl idea (launched in 2016, apparently) seems to involve placing each person signing up for an insurance policy within a wider social context. Instead of acting as a hallowed individual, you sign up for a policy along with a group of your own choosing – perhaps other family members, a group of friends or a group of workmates. The responsibility is shared, because what you do affects those you sign up with.

The collective conscience

This is the angle that originally wowed me a bit, because it is a significantly different perspective from the individualised customer role.
However, one of the main business drivers for the Gobundl idea actually seems to lie in reducing the incidence of insurance fraud, which increased by 55% between 2010 and 2015 – according to the Danish Forsikring & Pension (Insurance & Pension) organisation. The logic is that you’re less likely to commit insurance naughtinesses and file creative claims if your responsibility is to people you know and have actively chosen to collaborate with when taking out the policy. It ain’t a faceless corporation you’re dissing and swindling – it’s your nearest and dearest. They’re the ones hit by the flak of your moral laxity.
Suddenly the dynamic shifts to the group, and to amorphous, old-school feelings of obligation, loyalty and not letting the side down. ‘Tis a delightfully Danish idea, redolent of the andelsbevægelsen cooperative movement and the social-democratic idea of collective effort. But it’s also an interesting conceptual counterpoint to our super-individualised digital infrastructure.

Less is better

How does this “collective conscience” work in practice? Well, one feature is that if the group makes fewer claims than expected, the members get refunds amounting to as much as 25% of the insurance premium. On the other hand, there are no extra punitive premiums to pay if the number of claims exceeds the expected. This provides a structure in which there are significant incentives – both financial and moral – to keep on the path of insurance-wise righteousness.

The Gobundl blurb describes it as a peer-to-peer insurance platform. It seems a great idea, but the chances of changing the behaviour of the mindless herd are probably less good. And this is perhaps why news reports (July 2017) indicate that the company’s survival strategy had already shifted somewhat towards being an agent for a traditional Danish insurance setup, in which the insurance company assumes the risk and harvests the premium payments, while Gobundl gets a fee for bringing in new customers. Hardly an earth-shattering/market-disrupting role, unfortunately, and the company seems to already have realised this by morphing its website profile.

This was somehow already presaged by the unfortunate bundling name. Business models come and go, but human nature ain’t that easy to change.

Something also happened to Gobundl, as its website is no longer current. As of early 2019, it seems to have morphed to this, delivering white-label software solutions to the insurance industry. A natural development, but they still have some interesting ideas about transparency in insurance services and individually customised insurance products.