(Extracted from Business Model Generation by Alexander Osterwalder and Yves Pigneur)
In the freemium model a small base of customers paying for a premium service subsidizes a large base of non-paying customers. The insurance model is actually the opposite—it’s the freemium model turned on its head. In the insurance model, a large base of customers pay small regular fees to protect themselves from unlikely— but financially devastating—events. In short, a large base of paying customers subsidizes a small group of people with actual claims—but any one of the paying customers could at any time become part of the beneficiary group.