Taking insurance back to its roots: how insurance got out of balance.
Here’s the problem: today’s insurance can feel confusing, complex, and overwhelming. It wasn’t always like that...
Modern insurance began in a coffeeshop frequented by merchants, shipbuilders, and explorers. They had a shared challenge: they could lose a ship, their crew, friends, and with them, their whole company on long and risky voyages.
What dawned on the leaders of the industry was that they could use their network to create a larger pool of risk and back each other financially. It worked. This format spread to many other groups of like-minded businesses. This is why you will see many insurance companies named after their founding cohorts — they started as farmers or neighbors.
Over time, the industry moved away from that close-knit, neighborly sense of community. Now there’s an invisible hand pushing all insurance entities towards getting bigger. That’s because of the law of large numbers. It’s a rule of statistics: the more times an experiment is run, the more accurately you can predict the results.
This moved the industry toward creating the financial insurance conglomerates we are familiar with today. It fundamentally changed our relationship with risk. Growing too large created bureaucracy, and made informed decision-making a thing of the past.
At Charter Partners, we aim to bring insurance back to the start by building communities of like-minded members, who get the benefits of both small and large. With both a democratic community sharing ideas and a real-time insights platform, we can make the best decisions together.
Losing influence: the problem with getting too big
As insurance companies grow bigger and bigger, it naturally gets harder to influence relationships, quality, and familiarity. The shipbuilders in that original coffeeshop lost the closeness and the specific industry knowledge that the product was built around.
Corporations, governments, and cities all struggle to maintain a local, specialized feel when they grow too large. It’s no different with insurance companies.
Insurance has always been about sharing risk, which means you’re never doing it alone. By design, the traditional market groups your risk with thousands of other businesses in a similar way as a captive does — just on a different scale.
Goldilocks had it right: it needs to be just right.
So now we know that you have to strike a balance between familiarity and size. Charter Partners addresses this through industry groups called Pods. Pods act like neighborhoods within a city and send equal representation to the board of directors. This approach allows members to have increased influence over their insurance programs while still being able to take advantage of a larger risk-sharing pool.
