With the US battling Hurricane Florence and typhoons battering China and the Philippines, the insurance industry is preparing for potential record claims. Handling those claims and, more importantly, helping those affected rebuild their lives is a challenge facing people across the insurance industry.

For today’s “Bonus Episode” we will be exploring how blockchain can provide insurance to hurricane afflicted areas. With us we have Renat Khasanshyn, co-founder of Etherisc. Renat is responsible for products at Etherisc, helping people join the Etherisc ecosystem to build their own insurance offering.

 

Blockchain in two minutes

A blockchain is a distributed ledger. By combining security and immutability through the use of cryptographic algorithms, the whole network can be absolutely certain they are accessing the same information. This enhanced trust and security creates numerous potential applications:

* Implementing checks and balances regarding funds or tokens in an account.

* Issuing and tracking an insurance policy.

* Using a smart contract to pay out claims automatically.

 

Etherisc

Etherisc, which also featured in a previous episode, (creating a decentralised insurance model with blockchain & smart contracts – Etherisc) is a decentralised insurance protocol promoting the collective creation of insurance products.

A protocol is a collection of rules. While these rules do serve as a guideline, what distinguishes a protocol from an industry paper is that the protocol creates a system of incentives and deterrents. Blockchain’s functionality enables it to promote collaboration by rewarding complying parties. For example, a member will be rewarded if it follows the protocol when valuing a claim.

Renat tells us Etherisc’s protocol consists of a theoretical and a practical aspect. On the theoretical level, the protocol outlines the responsibilities of each party in the Etherisc ecosystem, such as designating which party should be recording premiums.

On a more practical level, Etherisc provides common tools and infrastructure. This includes product templates or even an insurance license and is part of what makes the Etherisc ecosystem special. The protocol creates an added value that would not be possible if each member worked separately, even if they used the same technology and underlying code.

 

Etherisc’s vision

Etherisc is not simply a decentralised insurance company. It is an ecosystem aiming to democratise the insurance industry and people can join the Etherisc ecosystem to build their own insurance offering. How members structure their company is completely up to them. It can be a peer-to-peer pool, a mutual fund or a for-profit company.

What matters to Etherisc is that people on the ecosystem are fairly compensated. Its protocol enables members to be compensated in accordance with the value they create regardless of their age, race, gender or personal connections. Imagine, for example, a 20 year old Etherisc member from China. They could be a developer, data scientist or software engineer. Etherisc’s protocol could allow them to earn 3% of an EU or US insurance company’s revenue, creating a both fair and valuable opportunity.