Guest blog from Dan Roberts, founder of Nayms
The Nayms Beta is now live at app.nayms.io. A milestone that, although seemingly normal today, will prove over time to signify a step change in how insurance works.
On the surface, insurance is pretty easy to understand. It is money covering the loss of money. That loss of money can occur from a car crash, a flood, a lost phone, a cyber attack or even a particularly heavy wind with a claim being requested through a few taps on your mobile phone.
Under the surface however the insurance industry starts to look pretty complicated. The payout to cover losses can be based on specific triggers, can be paid out based on an exact loss amount or some other measure such as pre-determined parameters, and can take days, weeks, months or even years to settle. The risk held by the party providing the cover can be transferred between insurers, reinsurers and capital markets. There are a significant number of different parties that all have various roles and interests in the flow of insurance business, from local and regional brokers to asset managers, insurers and the insured. The variables are endless.
This complexity exists in an industry that has foundations that were built in the 17th century. However the fact remains: the insurance ecosystem is one that is vital for the vibrancy, liquidity and growth of our economy, providing protection for our population, and allowing capital to be efficiently allocated.
With this in mind you can simplify the complexity of this industry down to one simple idea: the insurance contract. So in a future where insurance is digital, what does this insurance contract look like?
At Nayms, we believe this contract will know what parties are involved and what their roles are. It will know how much cover is being provided for what risk. It will know when it should be paid out, in what amount and what parties have decision making power in various situations. It will limit the liability of those providing the cover, will ensure zero counterparty risk and will give capital providers the choice of how much exposure to take depending on their risk appetite. The contract will need to be transferable to other parties in a transparent environment where buyers know they are seeing market rates, and will need to track this transactional activity in real-time along with the new parties now attached to the contract.
It will need to be flexible so that new data driven methods to automate payouts can be attached to the contract. It should be able to generate anonymised and standardised data to benefit the participants of the ecosystem that it serves, in a way that grows in value the longer the ecosystem is operational. And its flexibility will need to extend to catering for different types of contracts, from fully-collateralised reinsurance capacity to under-collateralised insurance pools.
All we know for sure is it isn’t a slip of paper. It is a digital, tradable, transparent, traceable contract of insurance. We call it the Nayms Smart Insurance Contract, and we’re excited for the market to start playing around on our dashboard, to join Nayms and our ecosystem of partners, and to start asking questions on how the future of this technology can best serve their business.
We have placed our initial contracts on Rinkeby, the Ethereum Blockchain test network for initial users to have a look around. Approved Brokers (you can request approval through our website) can place test contracts for their clients that can then be collateralised by capital providers in a sandboxed environment. Our first iteration is designed around fully-collateralised contracts with binary tranches, where “money” covering the loss of “money” will start with “Bitcoin” covering the loss of “Bitcoin” (using Wrapped Bitcoin — WBTC) and “Ether” covering the loss of “Ether” (using Wrapped Eth — WETH). However we are utilising the stablecoin Dai to allow “USD” to cover the loss of “USD” opening up the platform to limitless opportunities. We have an exciting roadmap of further features and products over the coming months and years, so stay tuned.
This is a collaboration project, from MakerDAO and Insurtech Gateway, to our broker partners like Breach Insured and Superscript. We welcome technology collaboration too. You can find our open source smart contracts here. Do get in touch with us at firstname.lastname@example.org to join this growing ecosystem as we build the much needed insurance marketplace for the next generation.
If you are working on an exciting early stage Insurtech business like Dan, we would love to hear from you. Get in touch for an informal, no string attached chat.