TLDR: Everyone has a right to participate in the insurance process and be paid for that participation. Insureds can leverage these communities for lower insurance premiums. Everyone involved can find security and strength in a new digital insurance model.
I’ve spent 21 years in the insurance industry. I came into the industry from the music world — and it was quite an awkward transition. I pride myself on being a quick learner and naturally curious, but when I started my journey in insurance I’ll admit that the process made no sense to me. I figured it would be a steep learning curve, so I was patient.
21 years and 4 insurance designations later, I understood policy terms and exclusions, risk managements strategies, the insurance lifecycle — but the macro view of how the industry works made less sense to me.
Before we dive into what I believe to be some solutions to the bigger problems of insurance, I want to be clear that I believe the concept of insurance is a noble one. Insurance can and does help many people. The idea of “making someone whole” is legit. All that said, the industry needs to change. A few questions I’ve asked myself throughout my time in the insurance industry:
- Is current insurance regulation really helping consumers? Or is it creating a high barrier of entry for new innovations in the space?
- Why is insurance so reactive?
- Why are people still filling out five page applications? How relevant is all that information?
- What would it look like if the money spent on “anti-fraud” measures was invested in incentivizing good behavior and building more efficient systems?
- Is the current workflow really the most efficient and effective for the consumer? [AKA: Do we need to spend all that money and time with underwriting, claims, etc?]
There are very good insurance carriers doing very good work. There are really strong insurance brokers providing really strong advice. Unfortunately, they are working in a confined box that just doesn’t incentivize any real improvement to the system. The system needs to be democratized.
Which brings us to the future of insurance. Imagine an insurance world where the birds are singing, the sun is shining, everyone is greeting you with a smile, and you just feel all warm and fuzzy. Even better? Imagine an insurance world where you were a valued participant in the process. Where the process is built around the needs of specific communities. A process that allows you to be included in the massive profits generated by insurance company. A process that is transparent and gives you full access to rating information and real-time claims stats for the community. A process that leverages all of these community focused values and helps you lower insurance costs while making some money for your participation.
In other words, the tools, protocol, and rails to operate as an insurance company does with the same level of security and safety [in capital] that the current insurance system provides. Because of Web3.0 and blockchain, this is all possible. Purchasing risk cover can move swiftly and confidently [nimbly?] into the future with the right protocol. We can all join a Democratized Risk Insurance Protocol [DRIP] and participate in many ways. For example, we could join as:
- Insureds looking to purchase property or liability coverage for on-chain or off-chain assets.
- Underwriters looking to use our experience to help drive profitable results for the DRIP.
- Actuaries willing to provide data and analyze data to help drive profitable results for the DRIP.
- Claims Assessors supporting an efficient and effective voting claims protocol to drive profitable results for the DRIP.
- Arbitrators, appraisers, capital investors, data endpoints — all joining to make the community stronger.
And why would they join? The insurance industry in the US averages $57,000,000,000 [that’s billion] in net profit. To be clear, I’m not knocking the ability for an industry to turn a profit and to make money. We can dive into the weeds on that at a later date. I bring this up because a DRIP can take that net profit and distribute it among the members we’ve discussed. Leveraging blockchain and Web3.0 tools, a DRIP can spread that profit across all members based on their level of participation. The result is a system that allows all participants earn some income, keep costs down, and be paid for their support of the community. Utilizing a solid token/crypto system all users also earn yield and participate in the continued growth in value of the native token. More on that in a later post.
I believe strongly in this model. I believe that democratization of an industry like insurance does not cause the industry to implode, but instead gives it the room and space it needs to evolve and grow. Insurance carriers can still plug their capital into these DRIPS and participate and provide security. They can do this while the other participants in the community drive the efficiency and profitability. The result — all participants win. All participants have a voice.
That is a Democratized Risk Insurance Protocol. I’m so excited about our role in building this.