Why Decentralized Insurance?
We democratize access to risk pools & risk trading.
- The current industry structure disincentives’ Insurtech to choose innovative paths as risk cannot be accepted by traditional reinsurers. UnoRe aims to set a new standard for insurance products on and off-chain.
- Misalignment of incentives between consumer and insurance company.
- In order to expose the blockchain ecosystem to the insurance industry, a regulated institution like UnoRe can act as a trusted intermediary.
- With the help of the blockchain ecosystem, we can bring insurance back to its roots: society’s safety net.
- Information asymmetry – insurance companies mask information from customers under the guise of reducing transaction costs. Ironically, this leads to incredible profits and an actual increase in transaction costs.
Insurers have access to historical data. e.g. loss ratios, giving them an unfair advantage over their customers.
UnoRe will disassemble this information asymmetry, therefore giving power back to the people.
The blockchain solves this problem:
Any end-to-end insurance solution needs to solve the same three basic problems covering:
- Expected losses.
- Long tail risk.
- Transaction costs.
Traditional insurance companies settled on an unfair way of exploiting this system.
Blockchain can help capitalize this system by incentivizing lower overall costs and better experience for all stakeholders. In order to do that, blockchain needs to solve the following four pain points which pile up costs for insurers:
- Coordination (“Managerial”) cost.
- Conflict of interest between customers and the company.
- Information asymmetry.
- Access to the risk pool
- Managers in an insurance company are basically coordinators between processes.
They also represent the highest cost to the company and ultimately the customer.
We aim to replace this coordination with smart contracts.
- Using blockchain technology, we can truly build a wall between operations which can avoid a conflict of interest.
For example, claim processors vs. risk holders, underwriters vs. customers.
- Resolving the never-ending issue of the lack of the information asymmetry.
- Risk pools of insurance companies are attractive investments, but are not open to the public. These pools are so attractive from a value-investing perspective that insurance companies are the most sought after investment for hedge funds.
Consider Warren Buffett’s portfolio, which is built on the backs of dividends from insurance companies.