Peer-to-peer insurance platform – the first innovation tested in the Bank of Lithuania’s regulatory sandbox
A year-long testing of Ooniq, a peer-to-peer insurance platform of Workpower, UAB, has been completed within the Bank of Lithuania’s regulatory sandbox. This could open new opportunities in the financial services market.
“We had an opportunity to better understand peculiarities of peer-to-peer insurance services by employing our regulatory sandbox, and it showed that they could be beneficial to consumers. After considering the results, we will draw up the guidelines and establish the conditions for peer-to-peer insurance activities, which should be proportionate to risks and enable the development of these services,” said Marius Jurgilas, Member of the Board of the Bank of Lithuania.
The peer-to-peer insurance platform allows its members to form groups of peers with similar interests and protect themselves against losses by pooling funds for this purpose. Group members make their own decisions on loss compensation. If funds are still available thereafter, they are returned to group members. A sense of community could encourage its members to jointly reduce risks and losses and thus protect themselves against risks in a cheaper way. An appropriately functioning peer-to-peer insurance model may be an alternative to conventional insurance as well as increase supply and competition in the insurance market.
The regulatory sandbox allows companies developing innovative financial products and business solutions to test them in a real environment under supervision and consultation of the Bank of Lithuania, whereas the central bank can identify potential risks and regulatory shortcomings in advance, ensuring that only high-quality and safe products and services enter the market.
More information on participation in the Bank of Lithuania’s regulatory sandbox is available here.