Monday, June 5, 2017

CryptoNews: Bandoo is a Local Insurance Startup that uses Blockchain Technology


Another day, another adopter of blockchain technology.

I found out about them from this techinasia article. The company in question is Bandoo, which is a platform to buy unemployment insurance.

While I clicked on it because it was about disruption in insurance, I was pleasantly surprised to find out that the disruption is using blockchain technology! Ethereum to be exact.

Basically, they offer unemployment insurance in an interesting novel way.

I might be wrong, but this is how I understand it works:

1st layer of fees is membership fees that is paid monthly as long as your insurance is accepted.

2nd layer of fees is actually your premiums. This is where the interesting part comes in. People are grouped into insurance pools and based on the number of claims by people within your pool, it will determine how much premiums would be charged. If there are no claims by anyone in your pool, everyone will get their money returned!

Essentially, this is how insurance companies work and how they structure insurance plans. The difference is from 2 things.

1) While you would be returned your premiums if unused or only partially claimed by the group, insurance companies would keep the entire amount as their profit.

2) Bandoo separates the cost of insurance into 2 parts - the administrative part (1st layer), and the premiums (2nd layer). The administrative part ensures that the company makes a profit from being a middle man, for setting up the infrastructure and maintaining it. The premiums part is completely out of reach for them - even if no one makes any claims, they will not make any extra profit because it would all be returned back to the pool contributors. If your insurance pool has a lot of unemployment, then your refund would be greatly reduced. If the economy is fine and booming, then claims will be few, so the actual premiums paid for the insurance will be very low after the partial refund.

Bandoo uses blockchain technology to give transparency to their business. All membership fees, premiums collected and payouts will be recorded on the blockchain, which means that everyone can see it, verify it and no one can change it.

This immutable property is very important to verify if the insurance pool really indeed have any claims, or not. If there are no claims (which can be verified through the blockchain), then all members should get their 100% premium refunded! If there are claims, it can also be seen in the blockchain, and members can see how much of their premiums are being paid out.

If they can gain traction and get a lot of people into pools, this will really be a massive leap forward for unemployment!

Everything seems perfect - except for one thing. How will they check and prevent fraudulent claims? How do people prove their "unemployment-ness"? While blockchain solves a lot of problems, this is something that still requires human processing and due diligence.

Just to be clear, this isn't an ad or anything. I didn't talk to their team. I just read the website, the article and applied my knowledge of traditional insurance companies, blockchain and risk-pooling. If you really think about it, this is not a very complicated idea at all (but I bet the implementation was a bitch!).

Blockchain might sound like scary technology, but compared to the archaic ways that things are done in today's world, this is actually one of the best, cleanest, simplest, logical, practical and (hopefully profitable) implementations of blockchain that I have come across so far!

So, I still love this idea! Bandoo, good job!

Can I be an investor or spokesperson? I'll even settle for affiliate. Email me~ Ahahaha!

1 comment:

  1. Actually govts, mainstream banks & financial institutions have already been studying & experimenting with blockchain technology for at least 2 years now. Of course their purpose is monetization, efficiency, effectiveness, cost savings. Not so much the anonymity or empowerment of the masses bypassing govts and banking networks.

    It's exactly the same story as IP networking tech in the heady years of late-1980s to early-1990s, transitioning through the commercialization of the 2000s and finally maturing into ubiquitous apps, IoT and into everyday wearables, appliances, vehicles, etc.

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