INSURTECH: Breaking down how technology seeks to transform the $5 Trillion Insurance industry

When it comes to insurance, the $5 Trillion global industry is often deemed to be a slow-moving conservative sector resistant to change. Innovation is thought to be achieved by merely repackaging existing products into flavorsome marketing wrappers with re-bundled cost structures. Breaking down the variables that impact the need for change such as changing demographics and consumer behavior, enhanced connectedness through digital mediums, the emergence of the shared economy, and shift from asset ownership into renting or fractal ownership, we see a profound effect on the sector as a whole. These variables are enabled by the likes of artificial intelligence (AI) applications, internet of things (IoT) ecosystems, and decentralized ledger technologies (DLT) which help accelerate the insurance sector to respond to new trends, the streamlining of operations, reduction in costs, creation of new revenue models and evolution in innovative products and solutions across the value chain. Let's take a look at some examples.

The core to any insurance product is the back-office process of underwriting, which is leveraging AI to extract insights from various data sources, using IoT devices as the collection mediums, and cloud infrastructure to instantaneously update data to models used to improve risk profiling and thus pricing. US-based Flyreel developed an AI-enabled underwriting system replacing the need for professional insurance inspections. It achieves this via an app on a mobile device which is used to scan a property. The image content is then run through computer vision algorithms to automatically identify items relevant to the customer's policy, enabling property owners to improve underwriting efficiency. Very cool.

The reduction in fraudulent claims losses -- estimated to run the US $80 billion per year -- and improving claim settlement efficiency are crucial areas in which technology is sought to address. Inscribe.ai is a San Francisco-based fraud documents detection platform that uses a combination of natural language processing (NLP) and computer vision to scan documents to identify fraudulent claims. In terms of improving claim settlement efficiency, State Farm is testing a permissioned DLT powered by smart contracts in auto claims subrogation -- a process by which insurers settle claims losses amongst each other -- to significantly speed up the process with immediate automatic payment disbursement as soon as liability determination is completed.

Lastly, a combination of DLTs, advanced driver-assisted systems (ADAS) or other telematics installed in consumer's vehicles to collect real-time data on driver behavior and driving patterns have been essential to create more accurate real-time dynamic risk assessments and pricing models. These include pay-as-you-drive (PAYD), pay-how-you-drive (PHYD), and on-demand just-in-time insurance pricing models, spearheaded by insurers such as Cuvva, Trōv, Metromile, Insure the box, Root Insurance. On the topic of auto insurance we would be remiss if we ignored self-driving cars. Although the argument is that such vehicles will potentially reduce insurance premiums by 85-90%, new risks such as software and hardware failure, as well as cyber attack will play a major part in formulation of new premiums. Needless to say that startups such as Avinew are already offering policies to cover semi autonomous vehicles using telematics, AI, and machine learning to help build comprehensive risk assessments and policy pricing models.

It is without a doubt that not that far in the future, we will see the emergence of decentralized autonomous insurance organisations that will leverage IoT, AI, and DLTs to enable Peer-To-Peer (P2P) insurance and eliminate the need for middle men. We will see a state of the industry in which customer engagement, policy underwriting, claim filing, inspection, claim settlement, payments are customized and fully automated. And we cannot wait.


Source: Flyreel, Forbes (State Farm And USAA See Stark Increase In Efficiency When Testing Blockchain Subrogation), Trōv, Insure the box, Avinew

BLOCKCHAIN: Tron Buys BitTorrent for (Allegedly) $120 Million


What do you do when your ICO raise nets you $70 million and then your token market cap flies to $2.3 billion without any software to back it up? We are of course talking about Chinese blockchain Tron, whose stated goal is to redesign distribution of entertainment and media content using decentralized technologies. Yes, the same Tron that has plagiarized the Ethereum and FileCoin white papers without citation, has copied Ethereum code without attribution, is using Delegated Proof-of-Stake while running one of the most centralized projects out there, and drew the ire of the usually serene Vitalik Buterin.

One thing you can do with $ billions of suddenly valuable magic beans is to buy a real property. And Tron has done exactly that by purchasing the original distributed P2P file-sharing company BitTorrent. The BitTorrent protocol took over the mantle of file sharing from Napster in the mid-2000s by slicing up media files into thousands of pieces and spreading them across a decentralized, indestructible swarm. Trackers like The Pirate Bay would point users to files that collated those pieces together (torrents), but no centralized servers existed to actually host these files. BitTorrent was a major innovation not just in piracy, but in moving large files across a growing Internet.

What this acquisition actually means from a product perspective, we do not know. BitTorrent Inc., the target, makes software that lets you search for torrents, and maintains the protocol. But we think (maybe wrongly) that even if this private company disappeared, nothing would happen to the existing activity on the network. BitTorrent doesn't really "own" its users, though it boasts over 100 million people using it. Still, Tron is getting development talent and a client that can maybe be re-purposed to ride the blockchain rails. Two parting thoughts -- (1) Kim DotCom, the ridiculous king pin behind piracy site MegaUpload had claimed to be launching a crypto-currency a few years back to power a new file-sharing paradigm, and Tron/BitTorrent looks a lot like that idea, and (2) imitation is the sincerest form of flattery, and has helped Chinese tech centers like Shenzhen move from technology knock-offs to fast execution and innovation.


Source: Coindesk ($120MM Acquisition), Plagiarism (Coincentral, Medium from Digital Asset Research), CCN (Vitalik on Tron), Logic (On knock-offs in Shenzhen), Bitcoin Exchange Guide (Kim Dotcom)