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Context-Based Insurance

"Context-based" is a relatively new concept for insurance which is commonly used in describing a category of insurtech innovations.

Context-based comes in two types, one that doesn't work, and one that does. Risk pooling is essential to insurance. If you cut the pool completely between those that are going to claim and those that aren't, you no longer have insurable risks. Sometimes tech writers unfamiliar with risk-pooling get too excited about the idea of only buying insurance just before you need to claim. That can happen by accident, which is fine, but when it happens by design it is usually fraud.

The version of context-based cover that really does work is, in essence, a way to underwrite from behaviour, rather than the written statements of a highly-partisan human: the insured. Read about this crowd with their vehicle insurance for Tesla owners. Link

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