Accurately calculating risk is critical for the peace-of-mind model

The single most critical challenge in running a business based on the Peace-of-Mind model is accurately calculating the risk of a customer making a claim. The entire financial viability of the business rests on this calculation.

Underestimate the Risk: If you underestimate how frequently customers will need your service, you will pay out more in claims than you collect in premiums, leading to an underwriting loss and potential bankruptcy.
Overestimate the Risk: If you significantly overestimate the risk, your premiums will be too high. This makes you vulnerable to competitors who can offer a lower price, or it may lead customers to "self-insure" by simply taking the risk themselves rather than paying your high fee.

Large insurance companies employ armies of actuaries who use complex statistical models to predict risk. A smaller business can use a simpler, but still essential, approach:

Analyze Historical Data: Look back at your own business history. For a roofer, how many service calls did you receive for every 20 roofs you installed over the last five years? What was the average cost of those calls?
Start Small: Offer the subscription to a small, controlled group of customers first to gather real-world data on claim frequency before rolling it out more broadly.
Limit Your Exposure: Define clear limits on what the subscription covers. This could be a cap on the dollar amount of a claim, a limit on the types of events covered, or a deductible.
Reinsure the Risk: For potentially catastrophic risks, you can buy your own insurance policy (reinsurance) to cover you in the event of an unexpectedly high volume of claims.

Failing to properly assess and manage risk is the fastest way to fail with this model.