The Microinsurance Business
As microinsurance changes from being just insurance for those less fortunate and surviving on low incomes, to being able to support a whole plethora of policies, we look at how things have moved on.
In the past, the trouble for microinsurance has always been making sure that it covers its own costs and runs at a profit in the long term. In a lot of cases though, the money being paid in through insurance policies is simply not enough to cover the insurance payouts. This has meant that microinsurance is just not sustainable.
And The Future
However, this could all change soon with the introduction of Blockchain. The new technology that is now available and data analytics are also softening the blow.
There are several startups already looking at merging microinsurance and Blockchain and seeing where the future takes them. Larger and more stable companies such as Zurich and Axa have also been reviewing the possible impact of Blockchains. Things are definitely moving in the right direction.
Insurtech Company, Etherisc, has already recruited a microinsurance expert to develop its Etherereum Blockchain products. The proof in the pudding has already been shown with Etherisc offering insurance for weather damage in Puerto Rico. The company has set up their product so that as soon as certain criteria – preset – are reached, payouts are sent out immediately. This is groundbreaking for many and has already had a major effect on the country where many of those hit by Hurricane Maria are still awaiting their money.
This type of insurance – parametric insurance – removes the need for claim assessments and the whole process is a lot cleaner and simpler with the preset parameters. By using Blockchain, costs which are also usually associated with a Blockchain are also mitigated i.e.; there is little need for thousands of employees or large buildings to house such employees because everything is done via technology. It means that less money is being wasted on running such insurance policies and more is available for the insurance payouts themselves.
Axa has also joined in the Blockchain product launch with parametric insurance for flight delays. The pre-determined criteria allow for immediate payout if a flight is delayed by two hours. Again, no need for lengthy claim forms and assessments, the preset criteria does all of the hard work.
Other advantages see the possibility for individuals to take on higher risks than ever before simply because of Blockchain. People can now create their own mini insurance groups by collating their resources together. They could have a great impact on the market in the future.
With the world and the climate ever-changing being able to support the more community-based individuals is becoming increasingly important. With the use of Blockchain, end result it is now apparent that funds can go directly to where it is needed rather than on the administration of the insurance. The money does not get lost (or spent on such administration) on the result.