BUDDY UP FOR COVER WITH NEW INSURANCE MODEL

A GERMAN peer-to-peer insurance platform is heading to Australia in a bid to make the industry more 'friendly'.

Friendsurance, established in 2010, aims to make the process of finding an insurer more simple and affordable.

Friendsurance Australia will be supported by the company's head office in Berlin, while Ellerston Capital's venture capital arm, Ellerston Ventures, is backing the license arrangement.

Finance industry expert Perry Abbott (pictured) will head up the local operation and says he expects the concept will be well received in Australia.

"The timing is right for Friendsurance in Australia because Australian customers are looking for new and different options in the insurance space," Abbott says.

"In Germany, Friendsurance customers have received on average 33 per cent cash back annually in property lines, which is an incentive we'd like to bring to our Australian customers."

Friendsurance Australia will offer a range of insurance products based on the share economy.

Customers form groups of usually 10 people and each customer contributes part of their premium to a pool to cover smaller claims.

The model also offers a cash-back bonus of up to 40 perc cent of premiums annually if no claims are made. The amount returned to customers decreases as claims are made by the group.

Abbott says by allowing customers to share the risk with friends encourages mutually beneficial behaviour, while the cash-back incentive will change the way insurance works.

"People will always buy insurance because it makes good sense to be protected, but our lifestyles are changing and the risks we are exposed to are different today than they were 20 years ago," he says.

"Friendsurance wants to work with the insurance industry to offer customers new dimensions in insurance products that they'll feel good about."

Friendsurance Australia will introduce its first product early next year.