Over the past 12 months Dan Roberts has been exploring the cutting edge relationship between insurance and blockchain with Insurtech Gateway. The project rapidly narrowed in on building a platform that allows cryptocurrency holders to invest in “Underwriting Smart Contracts”, resulting in the launch of a brand new company, called Nayms.
Dan, when you meet people who are not in the Crypto, Blockchain or Insurance space for the first time, how do you explain Nayms?
I say we’re building technology that solves the $250bn cryptocurrency ‘insurance problem’. The crypto ecosystem cannot rely on traditional insurance capital alone (denominated in USD) to insure a crypto-denominated loss (i.e. BTC, ETH). The volatility between the two currencies means policies provided have to price in a huge amount of headroom to adjust for this inefficiency so policies are expensive and, more importantly, won’t scale as the cryptocurrency market expands.
To solve this we’re building a platform that allows crypto-investors themselves to cover such risk in return for a yield, by holding collateral in our smart contracts. With assets now matching liabilities, this cover can now scale as the cryptocurrency market expands and contracts. If this market is to scale to an estimated $10tn over the next 7 years, we believe the industry needs a native insurance solution to work alongside traditional capacity to keep up with such growth.
And how do they normally respond to that? Are there any common questions you get asked again and again?
It’s clear that people understand the basic problem of using one currency to cover another, particularly pairings that have such significant volatility. I think the mainquestion is the “why blockchain” question. More and more, and rightly so, people are wanting to understand the need and value for this technology. It’s a simple one for us. Firstly you can’t do anything with cryptocurrencies without using the underlying system that gives it value. So as our platform enables crypto-crypto cover, we’ll be working with blockchain. The exciting part for us however, is through creating this platform using smart contracts, what comes out the other side has many more applications in the wider insurance market. For example instead of just volatile cryptocurrencies like Bitcoin and Ether being invested into these contracts, you can invest a stablecoin (a cryptocurrency that is pegged to USD). This enables our contracts to underwrite fiat denominated risk (USD). These fully collateralised contracts have very similar ties with traditional Insurance Linked Security (ILS) contracts, a large market that we are excited to build some pilots for.
Overall the insurance contract needs to be fully digital. It needs to be transparent, accept various data sources where appropriate, dictate ownership, be resistant to any centralised technology companies control and be tradable. This is what we will be working on over the years to come, and we’re excited to get started.
Is there an interesting story behind the name ‘Nayms’?
Lloyds of London “Names” are high-net-worth individuals who pledge their capital into the Lloyds underwriting ecosystem. In the late 1980’s controversy surrounded the Lloyds structure as Names were suddenly liable for losses they weren’t aware they were covering. Old asbestos claims dumped the liability on these Names who had unlimited liability, so were having to remortgage their homes to cover their losses, and a legal battle ensued. At Nayms we believe in the principle of this set-up, but a redesign is clearly needed. Our smart contracts are fully collateralised so investors have limited liability, there’s no counterparty risk and the type of cover is fully transparent from the beginning, so no nasty surprises. It is literally impossible for someone to write new risk against existing smart contracts. Nayms are the individuals who pledge their assets in return for a yield. A new take on an old idea. So for us the name Nayms represents the community of investors that allocate resources to support growth in the cryptocurrency market.
What makes your idea unique?
Although we believe we have a great opportunity to capitalise on a significant inefficiency in a number of large markets with a great product, our uniqueness comes from our growing team.
We have experience across cryptocurrency, economics, insurance, fintech, blockchain development with a team that speaks English, Italien, Chinese, Greek, French, Malayalam and Hindi. We communicate vigorously everyday figuring out difficult problems to bring this new solution to market. I am immensely proud of the Nayms team and look forward to welcoming more over the following months as we launch, grow and compete in a truly exciting space.
When you were younger, what did you imagine yourself doing at age 30?
Up until I was about 9 I quite fancied being a policeman so I could drive a fast car. That aspiration didn’t last long. Later on at school I was keen on pursuing a medical career as both my parents were doctors, but I was strong in maths – achieving one of the top 5 marks in the country at age 16, and I enjoyed my economics classes so took that as a degree. It was at the University of Bristol that I played around with a lot of new ideas, and was Treasurer of Bristol Social Enterprise so worked closely with a lot of innovative students. I started my first company as soon as I left and haven’t looked back.
What has been your most challenging moment so far? And how did you overcome it?
As the blend of cryptocurrency and insurance is an emerging field, our main challenge has been working out our regulatory strategy. We have worked hard over the past 4 months to figure out where we do and don’t cross over with global regulatory parameters and are now excited to be working with the Bermuda Monetary Authority (BMA) as a first step. We expect to be running a trial in Q1 2020 under a regulatory sandbox from the island, providing us with the tools to tackle this complex but lucrative space.
What was your main mission for 2019?
2019 was the year of building and communicating the concept of Nayms. Q3 was filled with travel, firstly with the Department of International Trade to San Francisco and Vegas on a funding mission as well as a trip to Devcon 5 in Osaka, Japan for the technical team. We’ve also been in Bermuda speaking to the private sector, the BMA and others as we progress through our regulatory journey. We ended with the lining up of our seed round that we look to close as the first port of call in 2020. A new decade and a new phase of the Nayms story.
How did the Gateway help?
So far the Gateway has been invaluable in aligning the project around regulation, partnerships with the insurance industry and with fundraising. As we go forward, this co-founding partnership will continue to position us well as a bridge between the cryptocurrency and insurance markets.
What would be your advice to someone looking to set up their own company in the insurtech space?
Err… Chat to the Gateway 🙂
If you are interested in how crypto currency and insurance are converging to create new business opportunities check out our event on the 30th of January 2020.