A world without insurance

Written by Sten Saar

Published on

When I think about what the best possible insurance product is like, I would compare it to perfect room temperature. It’s always there, it exists all around you in the background, but it doesn’t make you feel uncomfortable. You don’t even need to think about it.

Imagine an insurance product that is so seamless, and so well suited to your individual needs, that you’re not even aware of it as you go about your business. Your policy is simple, you pay a fair price and you don’t even notice it unless you need to make a claim.

But what if insurance was not there at all? Could a society where risk is not covered grow economically, even without any protection against uncertainty?

The first thing to say is that insurance impacts everyone’s lives, whether they know it or not. Although it has acted as both an enabler and a blocker for different activities over the years, there are many things which simply could not have happened without it.

Its evolution is absolutely fascinating. From the modern "birth" of insurance, where Lloyd's of London helped facilitate global trade, all the way to satellite insurance enabling modern communications technology, insurance has existed to support innovation.

Without the protection insurance offers, it is extremely difficult for innovation to take place. At least, at the pace that it does in the world today. Insurance offers a buffer of financial protection which empowers people with the confidence to take risks and to do things without certainty about their outcomes. If people can take risks, they have the freedom to explore new ideas, because they know that they are covered if something goes wrong.

We can even trace this idea back to the origins of insurance, where ancient Babylonian merchants protected their shipments, recorded in the Code of Hammurabi. Without having cover in place, Babylonian ships may not have set sail at all.

But the importance of insurance is also seen in modern examples. After the 2008 financial crisis, there was a lot of concern that AIG would collapse. If AIG had gone under, aeroplanes wouldn’t have been able to take off. A cornerstone of globalisation would collapse overnight, with devastating economic consequences.

It is the role of insurance to respond to changes in the world and to be able to adapt with new products that can offset increasingly complicated risk. Zego was founded on this idea. Traditional insurance could not provide a product suitable for food delivery drivers, so we created our pay-as-you-go cover as a solution to fix this.

As technology continues to advance at an increasing pace, it is becoming more difficult than ever for traditional insurers to keep up. At Zego, we are committed to making sure that we provide insurance products that enable innovation instead of blocking it.

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