Addenda is the first insurance blockchain solution we have recently covered on Insureblocks from the Middle East.. For this podcast we were joined by Walid Daniel Dib CEO and co-founder of Addenda, the blockchain for insurance subrogation ecosystem in the UAE.

In September 2018 Walid and his co-founders registered the company in the UAE and in the Dubai International Financial Centre (IFC). They set out to build a few prototype which didn’t quite work including a life insurance solution that was more of a solution looking for a problem. However as Walid puts it, they “struck gold” with the motor insurance subrogation solution that they’re currently working on.

 

What is blockchain?

Blockchain is essentially a decentralised network. Where information that's shared between two participants is also shared across the board and everybody else in the room. Depending on whether it's a private blockchain or a public blockchain, that data could be encrypted, and or shared with others without them knowing the content of that data. Within an “old school” blockchain the public blockchain rely on certain consensus mechanisms, such as proof of work, and proof of stake to operate but more enterprise friendly blockchains rely on different types of consensus such as Byzantine fault tolerance.

 

The road to motor insurance subrogation

The focus on subrogation came be seeing the issues that exist in the UAE and in the MENA region in general with regards to how manual certain insurance processes are. Walid and his team wanted to start with something that’s both high volume and low value in claims. Property insurance has very high value but low volume. Medical insurance has a lot of personally identifiable information which can be tricky in the UAE. Motor insurance ticked all the boxes.

July 2018, Walid and his co-founders quit their jobs to focus building on their blockchain motor insurance which was ready by December 2018. They signed their first client in July 2019 and within the following month signed up seven more insurance companies.

 

Lack of Insurtechs in the Middle East?

There are four or five Insurtechs in the Middle East, but most are aggregators in the space. In Walid’s opinion, the Middle East is still a few years away from having some deep tech startups. There is more demand for technical talent than there is supply. However with the recent exit of large startups such as Careem sold to Uber in March 2019 for $3.1 billion and Souq sold to Amazon for $580m in July 2017. There's now a bigger appetite for both investors, governmental entities and even clients to take Insurtechs, whether blockchain or otherwise more seriously.

 

Insurance market in the UAE

In spite of being a relatively small country the UAE has more than 60 insurance companies. The top 5 insurers control more than 50% of the overall gross written premium whilst the vast majority control single digit percentages if not less of the market. There is now increasing activity in terms of mergers and acquisitions with a lot of gossip regarding a larger merger between Takaful.

 

The motor subrogation opportunity in the UAE

If Car A hits Car B, and Car A is at fault and assuming both have comprehensive insurance policies. Both respective insurance companies will fix the cars, but as Car A was at fault, Car B’s insurance will chase Car A’s insurance for payment. A large number of documents will then need to be exchanged:

* Three competitive quotations to show the cost of repairing ...