Insurance has been around forever, but its problems haven't.
That's the thinking behind new social tech start-ups looking to take insurance back to its centuries-old roots, when Mediterranean merchants were known to pool the risk of losing ships at sea.
A modern shift away from those origins—to a system of paying for a company to take on that risk—has introduced new problems. These include expensive premiums, fraud, incomplete information on policyholders, and the moral hazards of coverage, just to name a few.
Enter peer-to-peer insurance, which is at least partly steeped in the socialist tradition of sharing risks and cost. Innovators in Europe are looking to leverage the power of your friends and social networks all while asking a simple question: Nobody knows your friends better than you, so why are you paying an insurance company to analyze their risk?
The less you claim, the less you pay?
Instead, Guevara—a name that recalls the Argentinian Marxist icon Che—along with fellow social insurance start-ups like Friendsurance in Germany or France's Inspeer, are proposing a different model that puts a new spin on modern insurance. It allows friends to group policies together, rather than with strangers, in order to introduce a sense of control, trust, and transparency.
Filing a claim comes out of the common pool of money you share with your friends, and the less claims you have, the less all of you pay. Any savings left over are either returned in cash payments or rolled over to continued coverage. (Tweet This)
Guevara CEO Kim Miller believes the model offers something very different from what big insurance companies sell today.
"Betting on an actuarial table isn't insurance, it's gambling," he told CNBC in an interview.
For Inspeer co-founder Louis de Broglie, who first thought of the idea when his friends opted to split rental car insurance on a road trip, the model is the latest example of the "sharing economy" revolutionizing a forgotten industry.
"The sharing economy has impacted a lot of sectors already, from peer-to-peer lending, to hotels and Airbnb, to transportation and Uber," he said, referring to the lodging and transportation apps respectively. "But sharing hasn't moved through the insurance sector until now, which is strange since from the beginning insurance was all about sharing risk."
Read More'Surprise'—Obamacare insurers desire double-digit hikes
By leveraging the power of social pressure from friends, Harvard professor and behavioral economist Brigitte Madrian believes the idea carries huge potential to reduce costs and discourage risky behavior.
"If the costs for everyone else in the group depend in part on my behavior, the group has an incentive to encourage me to act in a way that reduces the likelihood that any of us have a claim," she said.
When a lot of groups aren't filing claims, that "lowers the cost to all of us purchasing insurance," she added.
Friendsurance, which was founded in 2010, says that 80 percent of its customers who went without property claims received cash back payments equal to a third of what they were paying in premiums. Guevara says pooling premiums policyholders can save 80 percent on insurance.
Read MoreDon't mess with Medicaid expansion? A lesson from Texas
Yet proponents of these insurance companies say it's not just policyholders who are benefiting from the social insurance model. Insurance companies stand to benefit as well.
Excluding health care, fraudulent claims in the U.S. cost $40 billion per year, increasing premiums for American families by $400 to $700 on average, according to the FBI. Yet, at least in theory, social insurance users would have a built-in deterrent against filing false claims—they would hurt themselves just as much as their friends in the insurance pool.
"It's a bit like Facebook in that you're connected through friends and that accountability goes a long way," says Tim Kunde, co-founder of German insurance broker, Friendsurance. "Insurance companies love us because people are happier, more loyal, and are saving tangibly." While it took some time, the company now boasts 60 insurance partners that are seeing high overhead costs, particularly on fraudulent and small claims, shrink.
Read MoreWill these big Obamacare rates get approved?
User growth at Friendsurance is rising at a rate of about 10 percent to 20 percent per month, which is good enough to get increasing attention from venture capital funds. Li Ka-shing's Horizon Ventures, known for investing in startups darlings like Spotify and Skype, led Friendsurance's round of funding in 2013. Now, the company is exploring where to expand next.
For Guevara in the UK, which offers auto insurance coverage of its own, the story is much the same. Growth has its founder confident enough to plan on crossing the pond in less than a year. Yet why is it that the model only exists in Europe so far?
Inspeer's de Broglie jokingly blamed the delay on America's distrust of European socialism. Kunde, however, said that "we just saw it as a chance to revive that very positive core insurance once had."
While all three of the companies' founders were surprised the social insurance model has yet to appear in the states, they were equally confident the system was poised to grow—regardless of how "socialist" the model may appear.