No Need For An Insurance Company With This Blockchain Startup!
Blockchain has taken over the world by helping different industries with its ultimate, secure solutions. Was replacing insurance services with a blockchain based solution ever thought about? Well Nexus Mutual did and today we have a risk-sharing platform that allows users to avoid standard insurance companies. The company makes it clear that the service is not insurance. Instead, it is a user-managed alternative, where users decide which claims are valid.
With Nexus Mutual it sure is safe because it uses smart contracts to manage, claim decisions and processing. It uses the power of Ethereum so people can share risk together without the need for an insurance company.
This is almost a major shift in the insurance industry as they are building an alternative risk sharing platform.
They also have a definite plan set for the future as they will also be offering crypto wallet cover, as well as more standard products, like earthquake cover!
Hugh Karp, the founder & board member is an insurance professional and actuary with 15 years of experience in a broad range of insurance and reinsurance roles including CFO of UK Life operations for a global reinsurer.
He has been a blockchain enthusiast since 2011.
Nexus Mutual says it is building a decentralised alternative to insurance. And what serves as the right option for decentralization? That’s right it’s blockchain. Thus they have been using blockchain technology to build a mutual (a risk sharing pool) to “return the power of insurance to the people”. The platform built on the Ethereum public chain will allow anyone to become a member and buy cover.
It is definitely replacing the idea of a traditional insurance company, because it is wholly owned by the members
Nexus Mutual says it has developed Smart Contract Cover, a product that is designed to pay-out claims if there is ‘unintended code usage that results in a material financial loss’, to address this need.
Members will join Nexus Mutual and once they collectively contribute approximately USD 3m worth of Ether, members can purchase smart contract cover.
Tokens will be generated when a member contributes either funds or expertise to the mutual. The initial board members will provide qualified technical guidance to the members of the mutual as well as enact emergency functions should they be required. The members can decide to replace the board if they see fit.
Hugh Karp, CEO and Founder said, “Ultimately, our goal is to launch a mutual risk sharing entity run entirely on the public chain that allows the Ethereum community to share a critical risk with each other. Long term we hope to expand to more towards standard products, like earthquake cover, where traditional insurance providers are often unable to access underserved markets.”
ICMIF CEO Shaun Tarbuck said, “We are delighted that Hugh Karp has chosen the mutual model to set up this ground-breaking, new insurer which is focused on making crypto currency safer for investors. Mutuality is a natural business model for new groups looking to share risks in the new digital eco-system”.
Nexus Mutual is not what you call an insurance company. It’s run entirely by its members. Only members can decide which claims are valid. All member decisions are recorded on the Ethereum public blockchain.
Smart Contract Cover is not a contract of insurance. These are also the fellow members who will decide on claims. Claims payments are enforced by token driven economic incentives rather than placing trust in an insurance company.
Membership rights are represented by tokens. Tokens can be used to purchase cover as well as participate in claims assessment, underwriting and governance. All funds raised from token purchases belong to members.
This people-powered alternative to insurance will go a long way once more and more people get familiarized with the concept.