On the surface, insurance is pretty easy to understand, says Dan Roberts from Nayms (pic below). It is money covering the loss of money. That loss of money can occur from a car crash, a flood, a lost phone, a cyber attack or even a particularly heavy wind with a claim being requested through a few taps on your mobile phone.
Under the surface however the insurance industry starts to look pretty complicated. The payout to cover losses can be based on specific triggers, can be paid out based on an exact loss amount or some other measure such as pre-determined parameters, and can take days, weeks, months or even years to settle. The risk held by the party providing the cover can be transferred between insurers, reinsurers and capital markets. There are a significant number of different parties that all have various roles and interests in the flow of insurance business, from local and regional brokers to asset managers, insurers and the insured. The variables are endless.
With this in mind Nayms are thinking a bit differently, and the Nayms Beta app is now live at app.nayms.io – essentially re-imagining one simple, traditional idea: the insurance contract. So in a future where insurance is digital, what does this insurance contract look like?
At Nayms, we believe this contract will know what parties are involved and what their roles are. It will know how much cover is being provided for what risk. It will know when it should be paid out, in what amount and what parties have decision making power in various situations.
It will limit the liability of those providing the cover, will ensure zero counterparty risk and will give capital providers the choice of how much exposure to take depending on their risk appetite. The contract will need to be transferable to other parties in a transparent environment where buyers know they are seeing market rates, and will need to track this transactional activity in real-time along with the new parties now attached to the contract.
It will need to be flexible so that new data driven methods to automate payouts can be attached to the contract. It should be able to generate anonymised and standardised data to benefit the participants of the ecosystem that it serves, in a way that grows in value the longer the ecosystem is operational. And its flexibility will need to extend to catering for different types of contracts, from fully-collateralised reinsurance capacity to under-collateralised insurance pools.
This is a collaboration project, from MakerDAO and Insurtech Gateway, to our broker partners like Breach Insured and Digital Risks. We welcome technology collaboration too. You can find our open source smart contracts here. Do get in touch with us at email@example.com to join this growing ecosystem as we build the much needed insurance marketplace for the next generation.