Atlas Insurance is the first European insurer to convert to a protected cell company. In this podcast, Ian-Edward Stafrace, Chief Strategy Officer at Atlas Insurance in Malta, talked to us about the advantages an insurance cell can provide to Insurtechs to rapidly innovate within the insurance industry by effectively becoming an insurance carrier themselves without all of the overheads and capital requirements. Etherisc, the blockchain insurtech company, used Atlas’s platform to rapidly prototype their flight delay insurance product.

 

About Ian-Edward Stafrace & Atlas

Ian joined Atlas back in 2000 as a commercial underwriter. He rapidly got enamored by insurance by its logical approach since Ian has a technology background. Atlas is one of the leading insurance players in Malta and is structured as a protective cell company. Ian’s role evolved becoming a business intelligence analyst, a risk manager, a compliance officer, a data protection officer, to now as the Chief Strategy Officer. In 2006 Atlas converted from being an insurance company into a protected cell company, becoming the first European insurer to do that.

We first met Ian at the D1Conf on the 5th of November 2019:

 

What is blockchain?

Ian defines blockchain from the set of benefits that are derived from it. There are three aspects:

* Distributed database

* Smart contracts

* Potential for P2P activities

Distributed database gives multiple organisations, one immutable version of the truth, one database, eliminating all reconciliation processes that today tend to happen manually between those parties. This brings efficiency and transparency. The insurance industry has a very long value chain from insureds, brokers, insurers, reinsurers brokers, reinsurers and data providers such as telematics for cars and health care providers for health. Having a common distributed database brings numerous efficiencies and having a smart contract on top of it we have the potential for automated self-executing processes.

Smart contracts enable automated self-execution of claims, pricing determination, limits setting and transactions themselves which can happen away from the organization’s core systems in a way that is decentralised and trusted because the rules would have been set in advance of the events happenings. This is ideal for parametric insurance as there is a trigger, which can create a deterministic action upon a set of agreed rules.

The P2P side is more theoretical of bringing the insureds and the capital providers closer to each other. Automated matching of customers, carriers and investors depending on risk appetite.

 

What is a Protected Cell Company (PCC)?

Protected cell legislation is found around the world in various jurisdictions sometimes called, segregated accounts companies or incorporated cell companies. Malta is the only full EU member state that has protected cell legislation applicable for insurance. The UK has insurance linked securities.

PCC as a structure has a single legal entity but its shareholding is structured in a way where cells can have their own separate set of shareholders which are completely protected from the liabilities of any other cell or the core. This means that the PCC can act as a hub or a platform with a single insurance license. Third parties can invest in their own cells effectively meaning they can own a piece of Atlas. Their investment will only be used for their busi...