Blockchain first shook the finance sector. It is now poised to do so in all aspects of the insurance industry.
According to Price Waterhouse Coopers blockchain’s potential to deliver overall value to the insurance industry is just beginning to be understood.
PWC data shows that 56% of insurance firms already recognized the importance of blockchain to their business. Yet 57% conceded that they did not know how to respond to the technology – yet.
That said, the upsides will be enormous. The industry is looking for use cases now – and they are examining specific areas in particular. One is absolutely KYC – or know your customer. Use of blockchain in identification checks could save at least $2.5 billion of the estimated annual $10 billion global processing costs according to an analysis done by Goldman Sachs.
But that is not all. Ultimately, blockchain technology creates opportunities for the insurance industry to reduce costs, delay and reputational risk while increasing legal certainty.
Insurepal is a next-generation offering of peer-to-peer insurance. Insurepal aims to completely replace insurance as it currently exists and offer a new kind of coverage that also covers transactions on blockchains themselves.
The team at Insurepal intends to harness the decentralized structure of blockchain with what is called social proof. Social proof is a way of representing people’s moral compass. In the Insurepal model, this is replaced by a financial guarantee.
Users are able to earn rewards and even discounts on coverage itself by proving reliability that is backed by guarantors on the network. Insurepal will offer both app interfaces for B2C customers and offer BaaS services for its business clients.
Ultimately the goal is to create a global group of lower-risk individuals allowing premiums among this group to drop in price by as much as 50% and across a range of insurance classes.
The team is also on a roll – having just won the d10e ICO Pitch Competition in Ljubljana with a $100,000 investment prize and in Bucharest.
On top of a token system, Insurepal is also teaming up with a law-tech firm Mattereum to provide the basics for its smart contract service.
Mattereum is an Internet of Agreements project to manage the legal rights over physical and intellectual assets via blockchain technology. The smart contracts use natural legal language to delegate authority both to the blockchain itself and off-chain arbitration bodies.
Combined with blockchain and a token service, users, in other words, will be able to translate real-world legal requirements into both a distributed authentication and payment layer that relies on a trustless guarantee provided by the blockchain. People will be able to get paid in other words. And enforce the terms of other kinds of contracts.
Including, in this case, insurance contracts and claims.
There are two use cases for users in the Insurepal model.
Direct services model. John is a safe driver. He pays $1,000 a year for his car insurance. When John’s friend Mary endorses John, he will be able to lower his overall premium from Insurepal. If John continues to have a good driving record, Mary will also earn a reward for endorsing him from Insurepal. If he has an accident and makes a claim, Mary and his other guarantors will pay for that out of the financial stake they made to endorse John.
Untrusted Payment Broker. Andrew and Susan want to do business with each other, but do not trust each other. They can, with the Insurepal platform, create a smart contract which defines what will happen in case the terms of the agreement are not met. This is then insured by Insurepal. If Andrew does not deliver the goods, Susan’s payment is guaranteed by Andrew’s guarantors. Payment is also made by Insurepal whether or not Andrew or Susan are ever “known” as entities or remain anonymous.
In both cases, all guarantees and payments are made by using the IPL tokens.
The IPL tokens issued by Insurepal can be used to:
- Insure blockchain business transactions – Fees and incentives for endorsers will be paid in IPL tokens.
- Credit and social proof score – Social proof endorsers can make a guarantee with either a credit card or smart contract. When several endorsers guarantee the same person, their credit score will proportionally increase in value.
- Award Insurance Premium Bonuses – By uploading a copy of their existing insurance policy, clients can receive rewards in tokens. This premium will grow more valuable with the number of endorsements a client receives.
- Pay Incentives– Endorsers will also receive incentives for guaranteeing other users in IPL tokens (or fiat currency). Endorsers will then be able to sell their tokens or speculate and wait for a higher market value. They can of course also use these tokens to buy or renew insurance policies in the future or even to pay for services at shops that accept IPL.
- Prove social identity– IPL token-holders will be able to identify themselves with the Insurepal community. Eventually, users will be able to sell their own social proof guarantee completely anonymously to receive both the guarantee and a proportionate share of their insurance premium.
- Adjust claims – Insurepal’s tokens will also be used to process claims, and where necessary, make adjustments. The community will decide, in other words, on the basis of smart contracts held on the chain, what the settlement will be. Insurance companies no longer have to be involved.
Here are the details of the upcoming Insurepal token sale:
Start of Token crowdsale: 16 January 2018
Duration of crowdsale: 21 days
Token name: IPL
Token base: ERC-20
Token supply: 300,000,000 IPL
Token sale duration: TBA
Token sale target: $5 million (soft cap) – $18 million (hard cap)
Token price: $0.10
Bonus allocation: 10% for those who contribute in the first 96 hours of the crowdsale or buy over 50ETH of IPL