Friendsurance: Social risk sharing

“Don’t underestimate what people are willing to do to save money.” (Kunde, 2012)

These are the words by Tim Kunde, the co-founder of Friendsurance, the first insurance company to break the traditional mindset and pave the way into a social, peer-to-peer insurance sector. The past few sessions of the course have highlighted the growing importance of the customer for the creation of value and pointed towards the innovative business model called the “sharing economy”. From Zipcar to Find-A-Desk, various examples have been outlined to illustrate that this approach has spread into countless customer-centric business areas. Yet, most insurance companies have been hesitant in adopting this business model.

Ironically, the core activity of insurance companies is the sharing of risks between a large number of strangers. So, in today’s world of sharing and co-creation, why would we not want to share our insurance? This has been the question which triggered three German entrepreneurs to launch Friendsurance in 2011. Simply put, the company does for a group of friends what traditional insurance companies do for a large number of strangers. The process is simple:

  1. Choose an insurance
  2. Bundle up with a group of friends who need the same insurance
  3. Reap the benefits

If no claims are made, the individuals receive their money back. If small claims are made, the cashback decreases for everyone. Big claims will still be covered by the standard insurance companies. Thus, a higher number of group members result in lower cashbacks and higher savings.

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Friendsurance’s customer-centric and collaborative business model has benefits for all stakeholders involved:

  • Friendsurance members can reap benefits in various ways. First, they do not pay more than they would for traditional insurances and are able to retrieve the money they did not spend. Secondly, seeing that friends are more honest with each other, they improve the quality of risk, reduce fraud and decrease the likeliness to put in unnecessary claims. Thirdly, contracts can be managed online on personal accounts, making insurance more accessible and easier to use. Lastly, Friendsurance can be applied to new as well as existing insurances, minimizing switching costs.
  • The insurance companies that partner up with Friendsurance are able to reduce costs of claims and processing costs of small claims. Moreover, they enjoy increased customer loyalty and satisfaction.
  • Friendsurance receives financial support from its insurance partners.

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The potential of Friendsurance is rooted in its ability to act as a social network in which members can share risks and co-create value. Thus, the company provides an opportunity for consumers to actively participate in their business model by creating profiles, choosing their insurance and forming a group of friends to share it with. Especially for young people “the business model of Friendsurance meets the zeitgeist of many insurance customers” (Roegling, 2015). As mentioned previously, it is rather surprising that the rising trend of the so-called “shareconomy” or “collaborative consumption” has not yet caught up with the insurance industry.

It is safe to say that Friendsurance is a company to watch. It has grown rapidly since 2011, receiving a lot of attention from private as well as institutional investors and slowly but surely moving into more types of insurances while expanding internationally. However, Kunde argues that scaling is not their priority yet – They first want to develop the ideal products and get it right (The Economist, 2012).  Nonetheless, he knows one thing for sure: “Don’t underestimate what people are willing to do to save money” (Kunde, 2012).

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Friendsurance (2016). Retrieved from:

Kunde (2012). Peer-to-peer insurance. Friends with benefits. In Interview with the Economist in 2012. Retrieved from:

Roegling (2015). Underwriter Composite of the renowned German insurance company Die Bayerische. Benjamin Huck, Schutz unter Freunden, Nürnberger Nachrichten, April 11. Retrieved from:

The Rise of the Sharing Economy. Retrieved from:

The Economist (2012). Peer-to-peer insurance. Friends with benefits.

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