P2P insurance does not make one an insurer

THERE'S a new fad in town and it's called the peer-to-peer (P2P) insurance platform that looks like an insurer and behaves quite like one, except that, to the regulator, it isn't.

Take the month-old startup Bandboo, a blockchain-enabled unemployment-insurance platform where its members pool money to insure one another and split the claims when a fellow member loses his/her job.

In explaining its business model and products, common insurance terms including premium, claim and insurance, are used liberally. The startup also compares itself with a traditional insurer but adds that its block chain technology promotes transparency, something the latter lacks.

Thing is, Bandboo's platform is not determined as an insurer by the Monetary Authority of Singapore (MAS), which first screens the startup. This is because it does not insure individuals and works on the premise that its members share risks and split the payout amount when a fellow member makes a claim. And because it does not assume the insurance risks of individuals by making good any shortfall when claims exceed pooled contributions, nor arrange insurance contracts between the individuals and external insurers, t…