Customer-to-Customer Insurance

Blockchain means that intermediaries can be eliminated. Intermediates / Third parties can be done away with to the greatest extent in a customer-to-customer insurance company.

Due to increasing municipal debt and cautious investment policies, citizens of the city of Herford, one of the deeply indebted communes within the region of Eastern Westphalia-Lippe , decide to set up an initiative: an infrastructure insurance company. To protect their existence and to offer protection against heavy financial burdens cropping up at short notice, homeowners pay into an insurance policy to cover themselves against being charged road development contributions, which can run to five-figure sums and thereby represent a significant burden for individual households.

A blockchain application is used for this. It protects against embezzlement, and decisions can be made on it by consensus, even using pseudonyms. The administrative costs for this are less than regular bank account management fees. The captive company will invest 5% of deposits of the insurance premium in cryptocurrencies to diversify risk and generate additional profits.

They have already been able to partner up with developers working within the open source environment of the Ethereum blockchain to create a d-app, a decentralised application. Internet-savvy users can set up smart contracts themselves to confirm and accept members, for example. The participants in the initiative, including some landlords, are already planning to use voluntary self-disclosure to document a rent index for the various districts of the city so that they can represent the slowing-down of rental prices to the municipality of Herford in a transparent manner.

The direct benefit and low costs ensure that tenants are highly interested in this. A housing association has already signalled its support and will add regional information and rents. It expressed interest in establishing the approach as a comprehensive solution via a platform — which opens up the services to a broader group of users. It is hoped that this will create a better image compared to its competitors, and it wants to use transparency and cooperation to create a good starting point, with positive brand recognition, in the face of strong government regulation.

This product is to be coordinated within a captive insurance company, specifically founded for this business model.

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