Bitcoin Forum

Hello all,

Some background. My project involves a deep dive into the economics of insurance. And suggest answers (=a whole new mechanism)...

What could be truly disrupted in the insurance industry?
Would a DAO be the solution?
What is your view of the insurance industry )agents, brokers, various middlemen, insurance companies, reinsurance companies, regulators)?
We all know they are super slow. Slow to pay claims. Slow to embrace technology. Slow for everything.
But do you trust the industry? It would nice if you provide the context such as "I have a life insurance policy"

Who do you trust? Why? If a DAO was well organized, funded, and solid would you trust them more than an insurance company?

Have you ever thought about where the money comes from? Would you be interested in being part of a group of backers (= providing a form of insurance).
Don't forget that a high level insurance is just a gamble. Lloyds in London is famous for that. Based on limited information they will say whether they will insure your project (oils rig, terrorist attack, or the fingers of a famous pianist) and at what price. They may impose restrictions as well: for example ships can't go in certain geographic areas (example offshore of Somalia).

Would you prefer to deal with an adjuster and a bunch of experts or would you prefer a simple smart contract?

I would really appreciate feedback from the group. Thank you,

Yes,but there's a big maybe.
Insurance fraud is a thing and a simple smart contract cannot handle the cases of insurance fraud.
All the big insurance companies are hiring detectives to investigate cases of insurance fraud.Do you think that  a decentralized insurance platform can solve this problem?
You can't bypass the human factor in the insurance industry.
The insurance industry is heavily regulated by the state and I don't think that any government would allow smart contracts and decentralized insurance.
Loyd's in the UK is a pretty old insurance network,but I don't know about any other companies in the world,that are copying the Loyd's business model.There must be a reason for that.
Calling high level insurance "just a gamble" seems like oversimplifying.The insurance industry is more complex than you think.Those experts know how to calculate the risk.

On the top of my head, most probably not. Correct me if I'm wrong, but insurance is one of those things that you're pretty much guaranteed money if it's the case that something happens to you that fits right in their eligibility criteria. What if the insurance wasn't granted by the DAO despite you being eligible? Who are you going to sue then? You're going to have a really really hard time trying to unmask anons.

How would a smart contract replace an adjuster?

I think you need to breakdown the problem. If the problem is complex, there's no single antidote that can cure all the problems. Let's see several areas that we can improve:
- Agent/brokers/middlemen: this the area in which inefficiencies occur, it can be reduced into "host/personal customer support" whose job is to make sure all documents provided by insured are legit, preparing paperworks, continually in touch with the insured. Can an app replace it? Or human touch is still preferred?
- Who will calculate VAR, premium, etc. can algorithm calculate it better than human (expert)?
- Slow to pay claims: how can the technology make it faster to verify all documents?

Automation needs a well-thought architecture, and without a clear white paper, it's difficult to tell whether or not your DAO will make sense.

OP, the radio boxes on the top show that you don't seem to have a deep enough understanding of insurance industry.
I will not write again what's already in the previous post, but there are many complex operations (from getting the best premium/benefit ratio to avoiding fraud) involved there which cannot be automated/put into smart contracts. Also without humans pestering the others to buy insurance from your platform, they may easily turn to the competition, just because there's somebody to (pretend they) hear them there.

My general impression of insurance industries, goes something like this.

• Detailed surveys of the consumer base are utilized to generate annual cost projections
• Said cost projections are divided by the size of the insurance pool, with a 5% markup on premiums to allow the insurance agency to reap a 5% profit
• In a year with more disasters and emergencies than projected, insurance is in danger of having profit margins decline into negative territory
• Insurance can be very limited by wealth and wage inequality, in terms of what disposable income consumers can afford to pay

It might be fair to say insurance is about mitigating risk.

While it may seem as if there are many middlemen who can be cut out of the equation similar to how walmart is known for streamlining their supply and distribution chains. It is possible that many middlemen are sales people or part of the network of accurate future cost projections. Both of which could be vital to survival and continuation in the industry.

Insurance can have a negative reputation for disputing claims and refusing deserved payouts on petty technicalities. But generally I think most insurance companies have very low profit margins, if they manage to turn a profit at all. Disputing claims and refusing payouts could be more an aspect of survival for insurance firms, than it is profiteering or a predatory or exploitative business practice.

You should really narrow down your conversation because it is far too vague and open. Of course insurance is a good idea, the only people who don't need insurance are people who could cover the costs of a catastrophe without it affecting them too much. In a hypothetical situation, if you're a millionaire and own a piece of Jewelry that costs $1 million but $100k each year to insure - then you might not bother with such a cost on the small chance something happens to it you can just replace it. If you're an average person and don't insure your house in event of a fire, you could lose everything that you've been working for your whole life. Most of the stuff you mention like reinsurance and regulators are totally irrelevant to the interaction that an average consumer will have.

And the other way around, imagine if someone is not eligible or makes a false claim and the DAO releases the funds, then it would be a problem because any problem in such a system fund can be repeatedly abused.

You are right and that's why while smart contracts are being used in almost every aspect nowadays, there are areas where human intelligence is required and it's impossible to implement smart contracts which are based on the conditions.

A simple smart contract is always better. I used to have insurance controlled by the government, which generally meant that I didn't really have to go forth and deposit seperate for the particular part, the deducted a small amount every month. Now there was this probelm with the RBI and bitcoins, that they banned my bank account which actually caused me a lot of probelms but I did not further care about my insurance even though I have been paying timely for 2 years, the authorities as well did not call me about that therefore for me the insurance industry is not a big deal, I would rather save money or you know take per year health insurance from a company, it's more secure, like right now living in Europe I had to buy an insurance for my temporary residency, so I actually did take it from a company, plus I get free doctor consultations and appointments, etc, it's cool and regarding the life insurance, that's something to worry about for people who have their whole family dependent on them.

Dam those are too many questions. Honestly speaking I would just state some general opinion about the insurance based on my personal experience about it and it’s claim. Well most of them are being treated well with their services and different features such as extra mediclaim, inclusive of family packs and the insane returns. In fact kn India the life insurance can also help you reduce the taxes being levied on our salaries. These are all just for the purpose of attraction and also be way beneficial.

Not sure if this is relevant but mediclaim is worst hit package in the life insurance. Once in while parents would always be little off track with health issues but these companies would try everything in their possession to let client go without it and thus get all the money itself. 

I think the suing thing can be possible with countries that have legalized bitcoin because they would guarantee that investors are protected from every exchange scamming hodlers. On the contrary the countries not having legalized bitcoin, insurance would not work. Insurance itself has more of legality in it so we can't talk about them separately but insurance and legality are mutually inexclusive.

Scammers can only be identified if they are seen in person. In my limited experience, I haven't heard of or seen anyone go to jail for falling victim to an online scam involving bitcoin; most cases are simply reported, but nothing is done about them. However, no one seems to know who to sue because people are just ranting about their money on the internet. In contrast to physical scams like those that occur here in the country, HYIP is extremely well-known, and as a result, the leader or owner usually leaves after a few months, only to be arrested later because they were aware of his identity and could easily track him down.

The insurance industry has already been disrupted. From a traditional structure with re-insurers, retail and industrial insurers and retail insurance representatives for sales and aftersale service, all done in written, in person and with complete lack of transparency, we are now in the era on on-line comparing engines and on-line advisors and in the era of the start-ups that harness all the technological savvy of the newer user to tailor products to their daily habits and new needs.

Complexity is minimised by using plain language, the middle-person disappears and the field is open for Venture Capital.

We're talking about a DAO here; a group of mostly anonymous people online. Sure you can sue if you want, but who are you going to sue? You're going to need to pay the FBI or something to at least attempt to unmask the anons; which will most definitely cost you a lot more than you could potentially get.

I think that https://nexusmutual.io/ is already offering a lot of insurance on protocols/platforms.

However, the fact that they openly advertise themselves as an insurance DAO, but at the same time proclaim that they are not an insurance product and the ultimate right to all insurance payout decisions is reserved by the DAO is really off-putting.

E.g. what if Binance goes down and the payouts would essentially crush the DAO? Would members vote in favour of compensating in full, or simply chicken out due to self-interest?

Did you ever hear of the story of Jim Clark trying to revolutionize the healthcare industry with a team of engineers right around the time the internet was taking off?  He and his team went to various branches of the healthcare system and offered them their software and gave their pitch about how the internet would streamline all the inefficiencies in the system....and they basically politely refused.

If the insurance industry adopts anything blockchain-related, I can almost guarantee you that it's not going to come in the form of someone creating a DAPP, an ICO, or anything else that comes from outside their fiefdom.  In other words, if they ever use a DAO or what have you, they're going to develop it themselves.

Second, have you noticed that there's seemingly nobody out in the real world who's made use of smart contracts or any other neat little thing that blockchain tech can do?  For huge industries, there either has to be something seriously broken in order for them to fix it, or a change would have to boost their profits massively.  Having said that, I couldn't tell you a thing about how a DAO would work in the insurance industry.  I'm not a big fan of that particular sector.

Lol.  And what you wrote is a great example of why companies haven't adopted crypto or even blockchain related features thus far, and it's been quite a while since bitcoin came out.

The insurance company wants your money and will always offer you some good return if you have trouble in your daily life. But unfortunately, when we are in trouble and need their insurance, they always ask for many things as the requirements to fill so they can pay the insurance money and that needs too long to be processed by them.

So I am not sure if DAO is the answer because the system is not wrong. But people behind that system need to understand that giving their responsibility to their members who claim their insurance is their work and their members do not have to wait for a long time to receive the money.

If they can fix their human resources and use their existing system or even integrate it with blockchain, that will work perfectly for people who want to claim their insurance because they will not wait too long. Hopefully, you can understand the real problem in the insurance company.

I think that there is serious room for disruption in this field.

DAOs can serve as fairer, more equitable and cheaper alternatives to traditional insurance just by way of getting rid of the middleman.

Plenty of people who want a return on their investment that is just marginally greater than bank deposit rates of peanuts, and plenty of people looking to get insured. And DAOs would make sure that over leveraged insurance doesn't happen by default as well.

Insurance industry contributes big to the economy. How can this be made more effective. In my country insurance scams can be seen very commonly. Here fake users were settled with the insurance funds as the documentation isn't cent percent legit. This is happening with the involvement of officials who are responsible in allocating insurance funds. Maybe DAO can do it without flaws as everything happens through the autonomous organization which doesn't fall under any control.

In my country, insurance isn't a popular thing. We get insurances when we travel abroad because they are sometimes required, but we usually live our lives without medical, property or other insurances. However, there are countries where, for example, the whole medical system is built of insurances. Sometimes it works pretty well (for example, in Germany or Austria), and other times it's terrible (for example, in the US). So I don't have a general attitude towards insurances because I believe it depends a lot on the context. But I don't see how smart contracts can act instead of insurance. If we're talking about ensuring that a buyer-seller transaction goes well, it's possible to use a smart contract to freeze the money temporarily and then pay it out automatically upon a certain event. But insurance isn't about securing funds for everything in advance, it's simply impossible. So in some areas insurance companies are necessary. And if a company is well-reputable, I don't have a problem with it being centralized.

Certainly right, there things that technology at them moment are limited. All works of the human cannot be done by the computers or AI, unless we can create a perfect AI which thinks independently and that thing is no way closer to our current timeline. There just things that need to be left for the humans to work as computers and technology were basically created by humans in the 1st place.
The idea of insurance being automated is great only if there is no flaws, at some cases of automated transactions do make errors, unless it is perfect upto 99.9 percent then it is a good one to be utilize.

Well, I know how much that most of us here likes things that has to do with decentralization, but everything cannot be decentralized. And one of those things I think will not work in this way is this insurance that you’re talking about. For a lot of reasons it is best that insurance companies stays as they are, and not really go into this decentralization stuff. And just like someone pointed out, if something should happen and you are not able to get your insurance money, then who do you point fingers at when it is a DAO platform? You wouldn’t have anyone to point fingers at since they are all anonymous. So I would say that this is not going to be changed at all.

insurance industry is the best reward in the economy. Nice thread!!

Not everyone can, but some stuff can and haven't been so far and that is the real trouble. Crypto itself is getting a lot more centralized these days if you look at it, I mean there are some projects with literally founders who decide what goes.

Axie could close the game up today and they would crash to zero, which they are doing even with the game open to be fair, so it is really not a big deal. I have to say that it is not going to be a big problem for me, but there are many who see it as a problem. This is why keep on trying to do something that is more decentralized and try to find things that make centralized things into decentralized and you are going to be fine investing into them.

As someone who's had an insurance license for many years and worked for several insurance companies I think insurance is a bit of a mixed bag.  Now lets look at the concept of insurance... a group of people submit money in to a pool in which can then be used when one of those people experience an event that then triggers for insurance to be paid out based on the insurance company contract/policies.  This is a way for people to protect themselves in an assortment of situations.  The concept of insurance makes all the sense in the world.  The problem is the companies behind them.

There are several types of insurance that exist today and I think they are also important to our life but some of them are just a waste of money like being asked and forced us to get because it was required.
*life insurance
*burial insurance
*building insurance

These are somewhat important to us. We are giving no hassle for our family anymore to whatever it happens to us someday which I really think will give them peace of mind. I was believing this was a huge help for us but in some insurance...They are just collecting money for us without a single benefit.

Having insurance is actually good. But the company managing the insurance should at least be fair to its clients. Sometimes when it comes to claiming, they will ask so many attached documents as if they don't want to pay their client. They will look for possible loopholes in order to avoid or lessen paying the allotted insurance. But if they want clients, they will give you good flowery words just to get their insurance. But here when it comes to blockchain tech, I haven't seen any insurance company that is successful integrating blockchain.

DAO will definitely be the solution in my opinion.

There are so many insurance frauds in recent days and decentralizing the whole industry just makes a lot more sense to ensure that fraud is kept to a minimum and any insurance claims are processed in a fair and reasonable manner.

Although, there needs to be a good protocol that comes out that allows this to occur, because security of funds is definitely one of the foremost concerns on everyone's mind when participating in a DAO of this nature.

For now, maybe people prefer the factor of trust voting the most because we all know that insurance companies are regulated in state laws, although they are complicated and slow, but insurance companies are quite complex and the legal rules are clear in the country so many believe it compared to DAO which does not have state laws and is decentralized so it has a considerable risk at this time, but it does not rule out the possibility if the state adopts the DAO and it is regulated in its laws clearly I think people will choose DAO, because the advantages are that it is easy and fast and also not complicated.

The concept is great but the actual implementation would be hard as it depends on the insurance company if they will adopt the DAO system or not. There are benefits of being transparent as it will hasten the long process in the insurance industry. If one big company will showcase the use of blockchain tech and show how they are doing and performing, it may be a very good example so these insurance companies will follow thru. There are already several insurance companies that are integrating blockchain tech in some of their operations. But no known big insurance company is known to have fully integrated blockchain tech up until now. I like blockchain tech owed to its transparency nature, because the adjusters or third party experts are prone to human bias.

If your project depends on an existing stablished insurance company to change their models and adopt some newer technology, you can directly forget about the whole project an move to something else. The insurance companies thrive in obscurity, unclear conditions, fine print, elaborate contradictions and back-checking on claims. DAO, blockchain and other are exactly about the opposite, that is, if the tech itself can provide any realistic benefit.

Given that the insurance template are difficult to maintain but that may not mean their are no projects that can take care of that. It looks like a new area for cryptocurrency but not for human being. It enquiry will be fulfilled by cryptocurrency in the near time if not in existing already.

You don't necessarily need the established insurers to adopt this model though.

There are plenty of high tech disruptors like Insurance and Nexus Mutual that are already doing this, providing insurance on DeFi applications for example.

So many possibilities, but it obviously depends on how much you trust a decentralized organisation to pay you out when everything is going south.

Insurances are very important for people and mainly for the economy. However, even if there are a lot available on the marketplace only a few of them do what they promise. It took me some time to find a good insurance company for my bike without which I do nothing. In the end, while surfing on the Internet I came across this site (https://simplebikeinsurance.com/) which offers the best bike insurance policies and I have never regretted that I have chosen it. Plus, it has the best specialists.

I have a car that is registered with one of the insurance companies in my city but I can't claim the damage due to unreasonable reasons from them. Since that I have become more and more convinced that insurance companies are just a soft-scam, they promise claims will be easy, but in fact they make it difficult. btw, DAO concept is very good, if there is DAO based insurance then I will definitely join in.

This is the usual problem of the insurance buyer. These agents will promise anything just to sell a policy.
But when it comes to claiming, as much as possible they will find loopholes not to pay.
So instead of peace of mind, you will get a headache for not getting what is owed to you.
However, I haven't seen a successful blockchain insurance company dealing with car insurance or even the comprehensive health insurance.
This should address the transparency as you will see all your transactions via blockchain.
I think, if there will be this kind of blockchain tech insurance company within your locality, people may patronize it.

On the other hand, the OP has not returned yet on this thread. So I am assuming he is not successful with his attempt on this industry?