Insurers as brokers in the Bitcoin World

Introduction

The idea of this paper is to explore the possibility of Insurers acting as mere brokers and using Bitcoin as the payment mechanism. In this model, the customers will log on to their apps and purchase insurance online using Bitcoins (or cryptocurrencies). The Insurer is the server(s) which holds a common ledger for all claims and payments. When you pay the premium, the Bitcoins flow to a central pool. The amount insured depends on the pending claims and future claims (approximation and to be taken probably as a certain percentage of the total premiums or a function of it). Ledger certification will lead to either earning the currency for insurance premium or getting discounts.

Advantages

• Complete transparency on the transactions, claims and payments

• Easy and speedy access and disbursal

• Limited profiteering as the reserve is controlled by the servers and not insurers

• System cares only about the customers and not shareholders

• No paperwork, limited exceptions

Risks

• Conversion against local currencies

• Low acceptance by agents like hospitals, etc

• High risk and volatility

Role of insurers

The role of insurers will be reduced to as those of brokers and risk managers. Insurance firms can provide advice and risk management services. They can get commission for this advice. They can also charge for creating products for the customers. They can own the system and regulate it.