Risk Sharing Rule and Safety Loading in a Peer to Peer Cooperative Insurance Model

The evolution of digital technologies is reshaping consumer habits and needs, driving process automation, and giving rise to innovative business models like Insurtech. Peer to-peer (P2P) insurance is emerging as part of this trend. P2P involves purchasing an insurance policy by sharing the risk with a group of peers. This group transparently monitors real-time savings and tracks claims filed by its members. At the policy’s expiration, if the actual risk is lower than anticipated, the peers receive a partial refund of their premium. This paper introduces a model to determine the entry price in a broker-based P2P scheme using a cooperative game approach. We employ the Shapley Value method to distribute the risk among participants. Numerical examples are included for illustration and discussion.