Teambrella, a peer-to-peer insurance system that utilizes bitcoin wallets and multi-signature addresses, recently released a demo on its website to show how the self-insurance system works.
Teambrella uses bitcoin multi-signature addresses to allow users to manage the flow of funds in a trustless, decentralized way. It will initially offer supplemental coverage for collision car insurance and pet veterinary insurance, with more types to come.
Members Insure Each Other
Under Teambrella, users insure each other. They retain control over their own funds at all times. Reputation systems incentivize all members to pay one another when needed.
The Teambrella website notes that it has nothing to gain by denying claims. “In fact, we simply can’t do that. It’s you and your teammates who have exclusive control,” it states.
In its white paper, Teambrella notes that a typical automobile insurance loss ratio is about 60% and adjustment expenses make up another 10% percent of premiums, with only half of the premiums paid back to policyholders as reimbursements.
With Teambrella, if a team member submits a claim, the member and his or her teammates pay the claim. There are no middlemen.
Decisions Made By Member Vote
Members must be accepted by a team. The team decides how risky the member is. Individual member rates will depend on the level of risk the team decides on.
When a team approves a claim, the payee is paid directly from teammates’ personal wallets. The personal wallets are controlled by the team via a bitcoin multi-signature. Teambrella does not keep members’ funds.
There are no set premiums. When a team settles a claim for a teammate, the team members pay their part of the reimbursement directly to the claimant.
Personal Bitcoin Wallets
Each teammate has a personal bitcoin wallet. There are no team wallets.
A teammate can withdraw funds from their wallet with the consent of the team, which will want to insure that all outstanding claims can be paid.
A member can appoint proxies to vote on their behalf.
In the beta and alpha stages, Teambrella is not assessing any fees. Following these initial stages, Teambrella claims its fees will be “nowhere near the amount that is taken by regular insurance companies.”
Teambrella is not suitable in cases where a law requires a regular insurance policy, the website notes, nor will it work for liability car insurance in most countries.
The website notes that Teambrella’s open-source software enables teammates to collectively retrieve funds if the server is down.
Insurance agents could emerge to reduce potential fraud and streamline the insurance process, according to Nasdaq.
Two Types Of Coverage To Begin
Supplemental coverage for auto collision insurance, one of the two types of insurance offered, covers the out-of-pocket expenses customers incur with all but the most expensive insurance policies. Pet insurance covers veterinary bills.
While Teambrella expects to add more types of insurance, it wants to keep its options fairly basic in the beginning.
Alex Paperno, a project developer, said Teambrella does not want users to create every type insurance in the beginning.
Insurance against natural disasters, for example, would require additional reinsurance when a large number of policy holders experience incidents simultaneously.
The Teambrella demo allows users to experiment with a fictional user for a supplemental policy. The demo uses fake money and fake team members. Users can file claims, vote on other users’ claims, issue proxy votes and other actions.
Most of the technical work has been completed. The developers will complete additional work on the user interface and address any bugs that emerge.
Open-source clients that users connect to Teambrella servers will be uploaded to GitHub next month.
Teambrella plans to develop a community in the early stages and possibly gain some investments to promote the project.
Participation is crucial to the project, Paperno said. He said it’s a classic “chicken-and-egg scenario,” where joining makes senses if there are others to insure the person who joins.
Teambrella is offering fee discounts to those who sign up for its newsletter, Paperno said. He said Teambrella will have pages on Slack, Reddit and consider.it.
Images from Shutterstock.