One of the big problems most modern insurance companies face is fraud. Why is it that some customers feel they can overstate a claim or make a false claim altogether? At least partially it is because they feel they are ripping of a big corporation which is an abstract entity instead of cheating on say their group of friends or individuals they interact with frequently. Insurance companies in return respond by making the filing of claims more difficult, in the process often denying legitimate claims as well. That further erodes how people feel about the companies making it emotionally easier for those tempted to commit fraud.
A similar dynamic is at work in many of the on demand services platforms. The platforms run algorithms to assign workers to tasks and to create ratings for them (which flow back into the assignment of tasks). Workers are often frustrated by the opacity of the systems and in turn try to figure out how to game the algorithms. Here too the perception is not one of cheating on a group of people but rather a faceless computer system operated by highly valued corporations. And like in the case of insurance it is easy to wind up with a dynamic that pits the platform against the participants.
What is an alternative to this? Platforms that are explicitly built around groups with group membership becoming the source of loyalty. If I am a member of small group of people that insures each other I will be a lot less likely to commit insurance fraud. If I belong to a group of drivers that together provides service to a neighborhood or a set of customers I don’t want to let down the rest of my time (or conversely: I will jump in if someone needs my help). That’s actually how things used to work in insurance if you go far enough back and also how a lot of services were provided until quite recently.
There is no reason why platforms could not be built to support insurance and service provision in a group model. In fact there are already several insurance startups doing so but I have only just started seeing the first service platform that’s explicitly premised on groups. It is somewhat more obvious in insurance because the group is both the provider and the customer of the insurance. Most on demand platforms to date have primarily seen the service customer as their primary customer and the workers on the platform as secondary. A group oriented platform would probably switch that and really see the groups that form and operate on the platform as the primary customer.
Another way to think about this is in relation to traditional firms. A firm is a group, albeit usually a quite hierarchical one. Most of the new platforms decided to do away with groups entirely and just have individuals operating on them. Platforms that allow for and support the creation of groups, including enabling groups to pick their own governance model (eg for deciding who belongs to the group and who doesn’t) are effectively a network of (smaller) networks. That of course is also the model of the internet itself and at least in part explains its success.
If you are working on a group platform in insurance or in services I would love to learn more about what you are doing. I believe this is an exciting model that could turn out to be widely applicable.
PS Inspiration for this post came from a NEOPOLIS study
