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hi everyone
um I'm here today to talk to you about
decentralized
insurance and where we are with that and
what how how the next steps could look
like quick one about who I am and who
I'm working with so I'm alas I'm
co-founder of B9 lab we do development
training and research around
decentralized applications and
blockchain mostly ethereum at the moment
because it works the best uh but yeah
other things as
well I want to talk uh to you about
insurance insurance and insurance is
often has this connotation of being
relatively dull and being old and being
boring but actually it is a slow moving
sector but it's actually could be quite
exciting in the future and it is quite
exciting in the sense that it underlies
almost everything uh almost everything
we interact with on a daily basis at
least around these parts is insured or
is is interacting with some kind of
insurance schemes it ties into different
marketplaces is so it really is quite uh
quite
fundamental
and the the options or you know the
opportunities with
decentralized decentralized
systems could be quite you know could be
quite disruptive for the sector now the
insurance
industry has not been disrupted in a
long time hasn't really changed in a
long time a few things have changed over
time but it still looks very similar to
to the way it looked 200 years ago new
technologies have obviously changed
things um but the basic model is still
the
same now
the blockchain and and decentralized
Technologies could present an
opportunity here to make it more
accessible also to those who are
underinsured or don't have access to the
insurance schemes they need uh it could
make Insurance more local and revive old
models like mutuals and I'll get back to
that and it could make Insurance more V
varied and more
custom the interesting thing here is
we've got a we've got an intermediary or
you know large
intermediaries and obviously the
technology is a an essentially
disintermediating
Force um and there are three core
elements here that make it
interesting and that creates a situation
where we could potentially build very
interesting uh interesting things with
this so we've got low transaction cost
when we operating on a public or uh
Consortium blockchain we've got low
transaction risk so the risk that my
transaction is being reversed or being
interfered with by any other party is
very low and we've got trustless
computations so we can Implement
relatively complex Financial models um
at you know in formal smart contracts on
a blockchain
system and this is interesting in a few
spaces and I want to define the problem
space a little
bit and where this could be applied so
we've got claim processing which is you
know we I buy a policy and the policy
sets out certain rules under which I get
my coverage
um and claim processing is one of the
hardest things to crack in this uh
in you know under this model
so in in many cases I have to send paper
documents or I have to you know go
somewhere I have to send data that is
not
easily uh not necessarily there in
digital formats or it is down to um
interpretation so so a claim processor
has to sit down and has to apply certain
rules and has to
decide and so this is for for most
insurances and we've also got index
based insurances things like crop
insurance for example based on weather
in
indices and they rely on data so we have
the problem of being able to or needing
to be able to bring data onto the
blockchain to make decisions there so it
splits into two main kind of problem
spaces one of them is rule-based claim
processing so this is bringing data onto
the blockchain and then making decisions
based on this
data which also brings in you know how
do you bring data on the uh how do you
bring data in and how do you make sure
that it's the right data and not being
fiddled
with the second General problem space
is other types of insurances that need
that need some kind of voting or that
usually have an have a person and
deciding on whether reclaim is being
paid out or not so this goes into
building incentive models that that
enable groups to decide which claims
should be paid out and which claims
shouldn't be paid out so this is for
traditional Insurance models where where
uh one participant or multiple
participants take out an insurance and
there is a detached pool of investment
taking over or taking care of the
coverage the other model of insurance
that is really really interesting in for
this space is mutuals mutuals have been
around for a long time they started out
as fire insurance it's a model where
group of people gets together and
insures each other this could be by
regularly paying into a pot and paying
out when one of the participants has a
has a claim or has a claim case this has
already been done with uh with car
insurance kind of a social car insurance
with a group of
people and again the interesting part
here is bringing in low transaction cost
and low transaction risk so you can
connect people very
efficiently the second is that it is
inherently peer-to-peer Mutual
insurances are inherently peer-to-peer
so you know the the blockchain
technology is perfect you know is a
perfect candidate to solve that problem
and
the the infrastructure in itself
obviously when we build something like
this is is trustless and on top of that
we can then build kind of custom trust
models so for example we don't have to
trust the infrastructure but we can
build a system where um we Define which
level of trust we want to have to other
people and lastly the M Mutual model is
a very it's very much a proven model
it's been around for a long time and to
this day is executed very
successfully now where this is generally
the direction this is generally moving
in and where we think this will you know
where this will culminate is kind of a
Marketplace creation so through the
lowering of the risk and the cost you're
enabling the breakup of existing
monolithic structures so at the moment
all of these things underwriting
liquidity modeling management processing
is all in one place
which is within one large insurance
company and this is really because it's
it's very very difficult to get access
to the the liquidity that is that is
necessary it's a large numbers game so
you need to spread your risk and it is
uh very difficult to connect different
players different parties in the market
in a way that is efficient enough to
execute this so a decentralized model
could be really interesting
uh in in the way that that is outlined
outlined on the right side there we
could have through you know through
trustless computation through smart
contracts we can bind different
participants in the market to certain
rules and we can you know we could see
the creation of an insurance Market
where you you can create a policy
yourself you get access to risk analysts
risk modeling you get access to
liquidity pools TOs and all of that is
tied together
automatically now there are a few things
that we've been looking into so
theoretical research and a bit of
experimentation because a lot of this is
just really down to trying out how these
model work these models work and uh the
game theoretical
elements there are a few areas where
it's really worth looking into and the
first three are mainly around weather uh
so we've got crop insurance bad weather
insurance Insurance energy markets with
weather and things like a double spend
micro insurance now I want to quickly go
into the proof of concept that we've
built so far which is which we'll
publish it's still in testing we'll
publish next week which is a a mutual
it's a simulation of mutual contract
it's a betting game you have a limited
registration period and you pay an
initial premium you join the you join
this this mutual and then you have to
pay in every interval so for example you
have to pay five ether every week and
once you stop paying you get your payout
so you know it's the equivalent of dying
in a life insurance
model the incentive is that if you drop
out first you get back less than you've
invested the longer you stay in and the
more other people drop out the more
return you will get and the last person
will receive about three times their
original original investment now this is
to simulate interest uh interest
accumulation
um the
first the first learnings we've had from
this is machines have a huge Advantage
with this so if you have a script that
executes the transactions regularly that
is much more efficient than than a human
which might seem obvious but you know we
are recording all of these and also if
you run out of money you are basically
dead and so liquidity always wins at
this game the next step is we're going
to publish this and I want to give you a
demo but I don't think I'll have enough
time I'll
see we'll publish this and you'll be
able to to to join and try it out it is
initially a betting game but we're
trying to solve Insurance research
questions with this uh we we will
monitor the behavior so this is
interesting to see when do people engage
and when do they drop
out we are starting to engage with
insurance companies and we've been
speaking to a few insurance companies to
improve models and to see where this
could
lead and ultimately we will iterate on
this so this is the first research
question we will you know we will finish
the paper around it and we will move on
to different research
questions now if you are interested in
joining when we publish when we publish
the contract and we publish the proof of
concept go there leave your email
address we'll add you to slack Channel
and if you're interested in the topic in
general go there join us and we will
keep you informed and as involved as you
would like to be now I had to update
my I had to restart my computer so the
test environment is not
running if you bear with me for a
second right
I I don't I will not have enough time to
to run the demo unfortunately but if
you're interested in seeing the demo uh
come speak to me
afterwards follow us
on follow us on
Twitter and email us if you're
interested in any of this and yeah find
me find me afterwards and I'll show you
the the demo and I'll show you how you
can how you can interact with it thank
you very much and if there are any
questions
AB uh yep we have time for a couple
questions um there's one thing in in
insur that I'm not sure that um at least
native cryptocurrencies are are good for
it's um so so comp insurance companies
they basically they don't have the money
to uh to cover all claims so they rely
on facts a bit like Banks they relying
on the fact that no old claims will be
um yeah I mean will be processed at the
same time um so isn't that weakness if
you would have
insurances uh in in crypto native
crypto this is this is actually uh this
is a very complicated problem so in if
you've got a Marketplace and you have to
you have to provide full coverage for
all policies taken out it becomes very
very
inefficient now
theoretically right now you're taking a
bet that your insurance will be able to
pay you and if theoretically if a
decentralized autonomous organization
becomes big enough and has enough
liquidity and has spread the risk far
enough it's a it it could approximate to
a similar bet so you could go you know
I'm I'm betting that this is that it's
going to be all right and they're going
to be able to pay me it is a very
complex problem and and I think you know
it's it's going to take some time to
come up with the with the solution and
also this technology doesn't solve all
problems uh at all it's it's very well
fit for certain subset and it might that
might expand but for the moment this is
one of the problems that that doesn't
really work also funds are tied up so
you can't go and invest them and get a
return So at the moment it's really
interesting for for mutuals for Mutual
schemes any other questions
great thank you well thank you very much
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