insurance protocol etherisc decentralized€¦ · etherisc decentralized insurance protocol dip...
TRANSCRIPT
Mission Statement
Etherisc develops a decentralized insurance protocol to collectively build insurance products.
A common infrastructure, product templates and insurance license-as-a-service make a platform that allows anyone to design, launch and distribute their own insurance products.
As a result, independent workers and risk capital providers earn fair share of created value, regardless of age, wealth, or personal connections.
Key Problems Addressed by Etherisc Protocol
Consumers suffer from: Developers and entrepreneurs suffer from:
Conflict of interest with highly asymmetric power distributionInsurance companies have a strong incentive not to pay out claims. Customers are in a weak position against them, don’t understand policies, often feel treated unfairly or even ripped off. At the same time customers are forced to trust insurance companies.
Enormous barriers to entryMulti-million minimum capital requirements, fragmented per-country regulations prevent developers and entrepreneurs from bringing new insurance applications to market. Each country represents insurance market with government-sanctioned oligopoly extracting rents from its population.
Rent-seeking insurers extracting enormous profitsIn 2016 the insurance industry took a 44% cut from premiums paid by consumers hoping to share risk with other consumers*. Out of every $1 billion in premiums paid to Lloyds of London in 2016, $490 million came back from risk pools in paid claims**. The remaining $510 million were extracted as rent and expenses for organizing risk pools.
High cost of new product developmentCurrently there are no mechanisms for cost-effective sharing infrastructure, insurance licenses, intellectual property, transfer and repurpose new products and risk models between software engineers and insurance companies across different geographic markets.
* See average loss ratio at 66.0% https://assets.kpmg.com/content/dam/kpmg/au/pdf/2016/general-insurance-industry-review-2016.pdf** See Net losses at 49.9% http://thoughtleadership.aonbenfield.com/documents/201608-lloyds-update.pdf
Why Insurance for Token Economies Will Unlock Mass Adoption
Fiat economies
*Source Swiss Re Economic Research** http://www.caixabankresearch.com/en/1206im-d1-es
Token economies
To unlock mass adoption, token economies must be safe to engage in. Token economies that are safe will enjoy mass adoption. Examples - wallet insurance, smart contract insurance. In traditional economies, 1% rise in GDP per capita results in growth in premiums per capita of 1.3-2.0%**.
GDP per capita in USD 1000
Insurance Premiums as % of GDP (excluding life insurance)*
The Solution: Blockchain and Smart Contracts
Immutable and incorruptible smart contracts decide about policy underwriting and payouts
DIP utility token: Staking DIP as incentive to provide great service for customers (cf. Augur REP, Numerai)
Risk Pool Tokens make risks tradable on exchanges, the blockchain version of Insurance Linked Securities
Oracles with authoritative data for parametric insurance
Decentralized oracles to incentivize claims assessors
The Benefits of Decentralized Insurance
Provably fair, transparent, automated insurance
Collusion resistant, aligned and balanced incentives; no central player can extract monopoly rents
Tokens, protocol and platform to enable a wide range of insurance applications and innovative products
Opening up insurance markets for smaller players
Covering the whole value chain of insurance
Product/Service Development
Marketingand Sales
PolicyAdministration
ClaimsManagement
AssetManagement
Reinsurance
Revenue Model For Protocol Users and Crypto Investors
Claims paid
Insureds
Up to $2300
Risk Pool$800 + $1500
of leverage
Premium
$1000
Premium-fee
$900
Reinsurance Market
Claims, if primary Risk Pool is depleted
Reinsurance Premium
Risk Pool Tokens (optional)
Tokenized Risk (Insurance Linked
Security)
OR
Stake$1500
Get $100 Reinsurance Premium + release of stake after 12 months
Organizes new product development, earns % of premium, underwriting
profit
Keeper Registry
Fixed Fee, configured by Keeper and Distributor
$100(Developers, Distributors...)
Sovereign Workers
Earns fee per oracle call, API call, or processed
claim
Oracles Registry(Pricing/Claims)
Earns %of premium for renting licenses, filing
compliance reports
Licence Provider Registry
Earns % of premium or fixed fee for distributing
to consumers
DistributorRegistry
Earn interest on staked ETH, BTC, USD without
selling the staked assets
Sovereign Investors
Up to $1500
$100
query
callback
stake
Fallback
Protocol Smart Contracts
Oracle / Claim Adjustor Registry
stake release
Stake release to a fallback provider
The Role of the Token in the Protocol
● Staking● Generating transaction fees● Generator / Usage Token model
User Who are these users? What can such user get as a result of using Etherisc? Why does this user need to hold Etherisc Token (DIP)?
Keepers Keepers collectively maintain the network by creating and managing risk pools. Examples: Developers and data scientists, entrepreneurs with ideas of insurance products who can organize teams and most existing insurtech startups.
Examples of Keepers currently operating on Etherisc Protocol - HurricaneGuard.io https://fdd.etherisc.com
Earn transaction fees (which Keepers set on their own). Keepers can set the following Transaction Fees: % of premium % of underwriting profits% of investment income on float
Examples of transaction fees - which Etherisc team operates Flight Delay Insurance https://fdd.etherisc.com as a Keeper, charging 5% transaction fee on premiums of insurance.
Every user earning transaction fees (percentage of revenue or profits generated by insurance products), must hold and stake DIP token worth of 15-25% of their annual earnings as a bond ensuring availability, quantity and completion of their services.
Staking DIP token replaces the need to enter/enforce services agreements using contract law and court systems of countries where users reside. Many users will not be associated with any country.
Stake is released after service period (30-365 days) is lapsed without a challenge by the Monitoring Oracle or Keeper.
DIP token effectively disintermediates trust between network participants because it replaces the legacy trust model powered by jurisdiction-specific contract agreements.
License providers
Insurance fronting services like AIG, Zurich, State National, Atlas Insurance PCC, Clear Blue, etc.
Earn transaction fees which are set by license provider as % of premium charged for renting licenses (insurance fronting). Typical fee currently charged in the US and EU is 3%-7% of revenue.
Pricing, Claims Oracles, Underwriters
- Full stack developers and UI/UX designers- Data scientists with risk models - Data providers - Claim adjustment services (aka Third Party Administrators)
Earn transaction fees for their service (for example for setting up a trusted data feed to pricing algorithm, or estimating the loss under policy (adjusting claims).
Relayers - Entrepreneurs and technology companies with large user base (mobile apps, wallets)- Crypto protocols, platforms and dApps- Established insurance companies
Relayers are distributors who earn one or more of the following: % of premium (transaction fee)% of underwriting profits
Risk capital providers
- Individual crypto-investors interested in passive income or security tokens- Hedge funds- Institutional investors
Investors earn passive reinsurance income on existing assets (ETH, BTC, USD) by buying risk pool tokens, without selling the staked assets.
To access tokenized risk pools, investors must hold DIP token IF such risk pool was configured by the Keeper to be accessible to DIP holders.
Users, their motivation, reasons to hold token
Why Decentralized Insurance?
Centralized Insurance Decentralized Insurance
Main beneficiaries Intermediaries Sovereign individuals
Number of intermediaries between insureds and investor 6-12 0-3
Out of $1B of premium, how much is paid out? $450M - $700M $800M - $970M
Provably fair
Open source insurance products anyone can copy, edit and re-deploy
Conflict of interest (incentive not to pay claims) Yes, less paid out=higher profit No, decentralized workers
Cost to build new product 10x-20x 1x
Time to market for new products Months/Years Days/Weeks
Product 1: Flight Delay
First launched for Devcon2 Sep 2016
Now legal, licensed, regulated insuranceFirst at #D1Conf and Devcon3 Oct 2017>100 policies sold, 7 payouts, ~3 ETH profit
Global roll-out planned for Q1 2018
Distribution partners B2B2C: Compensation services, Online Travel Agents
B2B2B: Travel Management Companies
Estimated market size: $250M in US and EU
Product 2: Insurable Wallet
Under development, ETA Q3 2018
“Cyber” Insurance for multisig wallets
Specifications for software and processes(key generation, key management, etc.)
Cooperation with leading multisig developer,wallets currently holding ~$2B in assets
Yearly premium between 0.5 - 3%
Reinsurance companies like it: new risk class, small bets on big books
Joel Martinez, Full Stack Engineer; Keeper on Etherisc Network
Jonathan Gonzalez, Fullstack Developer, UX Designer; Keeper on
Etherisc Network
Product 3: Hurricane Insurance
Under development, ETA Q4 2018
Insurance cover for hurricane perils, especially for low-income households and small businesses
First example of independent team working on a product for the platform: “Keepers” of the network
Platform Value and Commercial Entities
DIP token represents platform value, market cap increases with usage
Protocol and platform development bootstrapped by the DIP tokenand maintained by the DI foundation, incorporated 22 Dec 2017 in Zug, CH
Commercial insurance entities owned by the foundation
Sell insurance products to customers
provide sub-licenses for third parties
Current focus on Malta PCC/SCC structures
Community and Cooperations
Aigang: Focus on IoT solutions, similar mindset, protocol and platform, token sale. Main difference is regulatory strategy, cooperation possible.
iXledger, Blocksure: Focus on insurance companies as customers, cost reduction and efficiency gains, cooperations planned.
Chainthat, Surematics: Service providers for existing insurance industry, focus on cost reduction and efficiency gains, no systemic change.
Nexusmutual, Wetrust focus on cooperative models.
We chair the Insurance Working Group of Enterprise Ethereum Alliance
We organized #D1Conf Oct 31 in Cancun as the first conference dedicated to decentralized insurance development, https://d1conf.com.
Founder Team
Christoph Mussenbrock
Banking background as a board member of a cooperative bank in Germany.
IT background as Chief of Strategy Development at Fiducia GAD and as CEO at parcIT.
Due to his many years of working in the field of banking and insurance, highly experienced in all matters concerning regulatory frameworks.
Master’s degree in mathematics.
Stephan Karpischek
More than 20 years experience in IT businesses and digital strategy advisory.
In 2015 part of the of the UBS crypto 2.0 innovation lab for banking use cases.
Involved with digital currencies since 2008.
PhD in information management. Thesis on mobile applications for the Internet of Things.
Renat Khasanshyn
Background as software engineer at a regulated insurance intermediary, Venture Partner at Runa Capital and CEO of Altoros.
Co-founded Altoros, a 250+ employee software and research laboratory in the area of distributed databases, container orchestration & developer marketplaces.
Co-authored Apatar, co-founded Belarusian Java User Group, studied Engineering at Belarusian National Technical University.
Advisors
Ron Bernstein Ralf Glabischnig William Mougayar
Jake Brukhman Tobias Noack Daniel Zakrisson
Journey so far
Christoph and Stephan met on the 2030 Slack in discussing insurance on the blockchain
July
First version of the Flight Delay Dapp was born,
presented at the Ethereum developer conference Devcon2 in Shanghai
September
Crop insurance proved that smart contracts can reduce operational costs to enables new markets
October
1 of 4 2016
Journey so far
Winner Blockchain startup contest, sharing the main
prize with Status.
November
First whitepaper on decentralized insurance markets. Most-funded project at hack.ether.camp.
December
Prototype for social insurance on blockchain at
Blockchain Virtual GovHack in UAE
January
Blockchain Oscar for “Most Innovative Blockchain Startup”
April
2 of 4
2017
Journey so far3 of 4
Joined Enterprise Ethereum Alliance, started the
Insurance Working Group
June
Jury award at ICO Summit in Zürich in pre-ICO start-up category
September
Sold over hundred flight-delay policies to travelers.
Insurance shaper of the year 2017.
November
Decentralized Insurance Foundation founded in Zug
December
2017
DIP Token Generating Event
Token Generating Event (TGE) started 25 June 2018
Total token supply 1 Billion (10^9) DIP
Funding goal $30M hard cap
Tokens distributed during TGE: 300M DIP
(= 30% of total supply)
KYC/AML are mandatory for whitelisting
IDnow Video-Ident for individuals
Bity.com for legal entities
Registration now open!etherisc.com/registration
REGISTRATION
DIP Token Distribution
Public Token Sale
Etherisc-Team & Early Supporters
Etherisc-Founder
Decentralized Insurance Foundation
45%
10%
15%
30%
Use of Funds
$10 Million $20 Million $30 Million
basic + some advanced objectives
full protocol components
several working parametric product
revenue stream for foundation
regulated entities in cooperations (PCC)
$3M to fulfill Solvency II capital requirements
all objectives
full protocol, gateways and interaction with other protocols
first non-parametric product
independent primary insurer
$11M to fulfill Solvency II capital requirements
extended operations
full protocol and gateways
risk trading platform with risk pool tokens
range of parametric/ non-parametric products
independent primary insurer and reinsurer
$19M to fulfill Solvency II capital requirements