Risk-sharing – The Future?
Earlier, we made the statement that paying for insurance is like paying taxes – a necessary evil. Yet we must admit this begs the question: What is it about the essence of insurance that drives many consumers and service providers to this conclusion? To understand, we first need to dig into a systemic problem that has traditionally characterized the industry up until now.
In the case of automotive insurance, whenever a consumer applies for it, they apply for an insurance plan. This consists of a package that gathers together various situations that could plausibly create a claim, and then arranging a quote that estimates the cost to the insurance holder. Insurance companies specialize in the creation of these plans, which is why quotes may vary in relation to the insurance provider who offers them. It is here that we see the problem, clear as the calm before the storm.
An insurance holder who lives in Southern New Mexico, for example, pays for an insurance plan that mostly covers automotive damage in relation to accidents on the road. However, that same plan covers claims that may be plausible in the grand scheme of the business practice, but not necessarily possible for the holder. Let’s say this person’s plan covers flood damage. Given the arid environment of Southern New Mexico, this coverage is absolutely without necessity. However, that same plan does not cover hail damage, and hailstorms are not unheard of in that part of the country. The holder is then left at a loss, mourning over the fact they’re paying for an impossible plausibility, while they are left in the lurch regarding a possible plausibility the provider overlooks. Thus, we can say without fear of contradiction that this is a form of usury – an evil many businesses claim to resist against, without fighting it to any effective extent. Ah, hypocrisy.
We believe blockchain smart contracts can solve this problem for good. When peer-to-peer networks on a blockchain platform are implemented into the insurance industry, we see a few interesting things happen. The biggest trend of them all is something called risk-sharing. Consumers can work directly with an insurance company to create a comprehensive insurance plan a la carte, meaning they can pick and choose which plausible claim can affect them the most, given their environment and traffic density. In exchange for this liberal system, consumers share the risk when it comes to the off-chance that something happens to their vehicle that their individual plan does not account for. Ultimately, it’s a win-win scenario for both parties, even though it seems the consumer has the upper hand. If everything covered is designated by the insurance holder, it cuts insurance company costs when it comes to claims disputes, complicated insurance payouts, etc. – all of which are governed by those pesky middlemen we keep railing about.
Though it may be an abstract argument nowadays, honesty truly supersedes hypocrisy when it comes to the development of long-term, meaningful growth in the various industries that keep the global economy working the way it should. If the development of blockchain technology further promotes this ideology, you had best believe we here at Lannister are going to do whatever we can to remove the negative veil surrounding weak growth everywhere. Whether it is in the supposedly evil insurance industry, or the supposedly enlightening renewable energy sector, we intend to have our hand in all of it, competition or not, to bring the best services and technology to businesses and the people they serve.