Modern digital technologies, such as the blockchain system, are becoming more widespread and have a serious impact on the economy. Developed services and sites strive to meet the rapidly changing needs of society – services and goods become cheaper, while taking the time for obtaining a desire is reduced. Another emerging trend is the so-called shared economy. Scientists from the University of Utrecht in the Netherlands, believe that sharing resources allows people to receive not only economic benefits, but also makes us “more social”, and our life – more convenient. If such a model is applicable to cars, houses, bicycles, and even wi-fi, can people share risks and protect each other from financial losses directly, without insurance companies? The REGA Risk Sharing platform gives an unambiguous answer to this question – we can!
Modern society strives for a constant reduction of transaction costs, as a result of which the sharing of goods and services becomes easier and cheaper. And what about financial services, such as insurance? Why we cannot protect ourselves from potential losses in unforeseen situations by dividing our risks with other people and buying not only an insurance policy in the traditional sense, but a guarantee from a certain person or group of people who are ready, in case of any problems, to compensate for the damage? Until recently, the problem was the need for an objective assessment of risks, which only insurance companies and banks could do. The experience of the creators of the platform at REGA Risk Sharing, developed a new product that has every chance to make a revolution in the insurance market.
The REGA platform has fundamental differences from the traditional and p2p insurance, which are concluded in the technological component, the basis of blockchain and the absence of insurance companies or agents of sorts. Receiving contributions from policyholders, issuing an electronic “policy”, plus the decision to compensate for the damage incurred is all controlled by computer algorithms and bots. Intervention of a person is limited only by the will to join a virtual community of mutual insurance and together with other participants to insure, for example, his pet. To define such a format of cooperation, the platform developers have introduced a new term – crowdsurance, which means that people are united in communities to provide a guarantee of compensation for unforeseen losses of community members.
REGA Risk Sharing is not the first project of founders, in which they used these ideas. Sixteen years ago in 2001, the team signed a contract for the development of risk assessment, scoring and underwriting systems for the first Russian mortgage bank DeltaCredit: then the iNSTANTLOAN platform appeared, which is in some way the progenitor of the REGA Risk Sharing platform. Today it is used by such giants as Sberbank and MediaMarkt. In 2014, the cloud service (SAAS) iNSTANTLOAN appeared, which made it possible to use the developments of smaller players, for example, companies that issue consumer loans. Thanks to the technology of blockchain and smart contracts, it became possible to create its own multi-service product – today the REGA Risk Sharing platform allows you to quickly and easily deploy insurance, scoring, and micropayments solutions for a mass user. Blockchain simplifies the exchange of data between the parties involved in the business model, making their synchronization fast and convenient. As a result of this technological evolution, there are services and products based on the principles of decentralization, which makes them more accessible to society. As a direction for the development of products, the developers chose insurance, a fairly conservative, but promising industry.
It is expected that REGA Risk Sharing will attract more than 100 million users, whose regular contributions will provide the company with a turnover of $5 billion in five years.
In the modern insurance system there are many problems and gaps, such as: a conflict of interests between the insurer and the insured, high commissions whose value for end users increases every year, lack of transparency, and unreliability of insurance intermediaries. P2P insurance has solved some of the problems listed above, but it did not provide the required level of protection. Crowdsurance projects have a number of advantages over p2p insurance. For example, the lack of geographical restrictions (the conflict of legislation of different countries makes it impossible to apply p2p solutions on a global scale) and a lower cost of services, due to the lack of insurance brokers and agents receiving commissions. In the p2p model, the rules are created by the members of the collective insurance contract, they actually manage the organization and take decisions on consideration of claims for damages. Management of all processes in crowdsurance products based on the blockchain system is carried out by smart contracts, which makes the system more transparent. Do not forget that the blockchain system ensures the safe storage of all information about the transactions carried out. In this case, the user is relieved of the need to fill in tons of paper and other bureaucracy – the process of obtaining insurance or payment is reduced to a short interaction with the chat-bot.
Successful examples of similar models are already on the market – for example, Lexi Club – the first product of the REGA team for managing the risk of injuries or sudden illnesses in pets. The industry of insurance services for dog and cat owners is not completely developed in the world, and there are great prospects – in 2016 the market for products for this segment of consumers amounted to $ 103.5 billion, while the share of insurance for our smaller brothers, for example, in the US, account for only 1-2%. The reason lies in the high cost of such services and the growing distrust of pet owners to insurance companies. For example, the average cost of insurance for a pet in the US varies from $50 to $ 110 per month.
Lexi Club crowdsurance product is an economical and convenient alternative to such insurance, due to full automation and the absence of an infinite number of intermediaries, the cost of insurance does not exceed $20. When joining the community, the user communicates with the chatbox in the messenger (Facebook messenger, Telegram, Skype), which uses the prescribed algorithms to assess the risks. The platform creates an individual smart contract that will collect all the information about the owner and his pet, track payments, perform agent functions, and monitor the fulfillment of the terms of membership in the Lexi Club. All this is implemented on the blockchain technology. When paying for membership, the owner receives a virtual Lexi Card ID as a confirmation of his participation in the club. The card is activated for 5 days and provides the client with an opportunity to compensate up to 80% of the costs of veterinary services related to injury or pet illness, and to access additional services such as ordering pet food and 24-hour specialist advice. In the event of an accident, the user will notify the system through the chatbot in the messenger about contacting the vet clinic. The system processes the application and helps the owner with step-by-step instructions in preparing the necessary documents for payment of compensation. When Lexi Bot receives all the documents, the smart contract analyzes the data and initiates the payment of compensation.
Lexi Club proved the workability of the business model and the demand for such services among users. So, the emergence of crowdsurance products to protect personal property (gadgets, cars, real estate) and health is not far off. Joint economy and innovative technological platforms like REGA Risk Sharing can change the usual perception of insurance products from “expensive and imposed” to “affordable and necessary.” It is this ambitious goal set by the founders of the project. This is in the very near future as they plan to launch a crowdsfunding campaign to attract investments from private users, during which people can become not only platform investors, but also an active participant. Platform creators believe that crowdsurance products will become a new standard in risk management very soon.