To me, the big reason why insurance has resisted wholesale disruption is that the problem being solved isn’t the cost of the product. In a certain kind of universe, insurance has virtually zero cost: it’s the sum of expected claims plus some compensation for caretakers of a giant bond portfolio. In the real world this amounts to something like 70% of the cost of your insurance policy.
The rest is all about people trying to f#*& each other over. Insurers are trying to charge the highest price and policyholders are trying to get someone else to pay for their mistakes.
Now you need to introduce underwriters and agents/brokers. Underwriters basically get paid to sniff out moral hazard and agents get paid to force insurers to compete. Together these two groups form about 30% of the cost of your insurance policy.
But here’s the problem: only humans can figure out if humans are trying to f#$% someone over. It’s immune to automation. For now, anyway.
This is why mutuals are so popular. They’re, in principle, owned by policyholders* who, by definition aren’t going to f*^% themselves over. That’s basically the idea of micro-finance. Lend some money to one person in a group. Then lend to another. If one person defaults, everyone defaults and the well runs dry.
Peer pressure is the most powerful force in humanity.
*In practice, mutuals tend to get really big and agency theory sets in. Management’s interests diverge from policyholders’ as oversight gets more costly. One striking thing about mutuals is that they’re often run like family businesses. Multi-generation CEOships and the like.