InsurePal is set to revolutionize the insurance industry by harnessing blockchain technology and merging it with social proof methodology that will reduce costs and have a positive societal impact.
A common facet of modern life is insurance, which comes in many forms: auto, life, medical, property, and more. Yet, like many economic institutions operating in today’s world, insurance has changed little over the last century. People who make responsible choices in their lives are forced to pay higher premiums in order to subsidize the risk of insurance companies for policies held by people making poor decisions.
This penalty imposed upon responsible people is being addressed by InsurePal, who seeks to fix the insurance problems of today by removing this outdated paradigm as well as addressing future insurance problems, such as those impacting blockchain businesses. InsurePal is building a self-adjusting, lean blockchain-based platform that uses peer pressure (social proof) to stimulate better behavioral patterns that not only benefit policyholders but also works to change society for the better. By accepting only those policyholders that have an endorser guaranteeing their good behavior, InsurePal will be able to reduce costs for the policyholders as well as offer incentives for their endorsers.
Bringing Social Proof to the Insurance World
InsurePal is a revolutionary new approach to insurance that harnesses the power of the Ethereum blockchain to create a platform that will improve transparency and outcomes for both insurers and insured and will address business-to-customer as well as business-to-business segments. While the blockchain is an integral part of InsurePal, however, the concept of social proof is its very heart.
Social proof is actually an old concept that has been discarded by insurance companies in modern times. The core of social proof is that an individual personally vouches that another individual is a responsible person who can be trusted. In the past, merchants would create consortiums and be tied together by a mutual vested interest. If one person acted in an irresponsible manner, the other parties would be hurt as well. This could lead to the irresponsible member being kicked out of the group. This social proof would lead to a person moderating their behavior so as to not to cause any harm to their compatriots.
With InsurePal, this social proof takes the form that the voucher will be held financially responsible for an at-fault claim filed by the person they spoke up for. In essence, they will be held liable for any deductible incurred. However, the application of social proof to auto insurance is a tremendous boon as both parties benefit.
As the InsurePal whitepaper explains: Mary vouches for John to be a dependable, safe driver. InsurePal offers John an insurance policy that saves him $400 per year. For her action, Mary receives $100 in IPL tokens to either use, sell, or retain as an investment. If John is in an at-fault accident, then Mary is charged $550 (the $400 savings offered to John, the value of the $100 in IPL tokens, and a $50 penalty). Yet if no accidents occur within a year’s span, both parties fully keep and enjoy their benefits.
Social proof comes into play as Mary puts herself at financial risk by vouching for John, and John is aware of this. As John has no desire to cause Mary any harm, he’ll continue to make smart decisions when behind the wheel. As most users of InsurePal will likely use friends and family as partners, the bonds of this shared community act as an inducement for a person to moderate their behavior in a responsible fashion.
Not only does this lead to money being saved for all concerned, but it also has a pronounced societal impact as well. The result is that InsurePal operates as a self-regulating insurance platform due to social proof. Savings are further enhanced by restricting the pool of policy holders to responsible individuals, which greatly reduces overall costs.
A Filed Patent and UK Pilot Project
InsurePal knows that the combination of social proof and blockchain technology, such as the smart contract and storage of social proof information on a distributed ledger, will have a huge impact on the insurance world. To this end, they have filed for a patent concerning the use of social proof methodology within the United States and throughout the world. Individuals can also view the proof of concept to see how the social proof insurance platform operates and leads to lower costs.
In the first development phase of InsurePal, a pilot project will be undertaken in the UK focusing on auto insurance. The UK is the perfect location for the pilot project as auto insurance costs continue to rise there every year but with no actual improvement in insurance company quality. There are 30 million insured personal vehicles in the UK, with a total of 3 million drivers who have been accident-free for 5 years. InsurePal will target millennials and the tech savvy to become social proof insurance early adopters.
Millennials are a logical choice as they have high premiums but little income. A portion of the millennial group are actually responsible drivers, and InsurePal will target this demographic by using knowledge gained from the friends, family, and colleagues of potential policy holders in order to determine their driving habits and personal responsibility characteristics in an objective manner.
InsurePal will utterly transform the insurance industry by harnessing the power of the blockchain and the use of self-regulating social proof. Policies will generate a smart contract with all the self-activating aspects (payouts, penalties, deadlines, etc.) embedded and be fully transparent to all parties. The combination of the blockchain and social proof methodology is a dazzling concept, which will eventually be applied to the many different insurance types in operation today, such as medical, property, and life insurance.
This new methodology also opens the door for new insurance types, such as insuring blockchain business transactions. Using this model, the parties involved in a business transaction can sign a smart contract wherein all of the details of the agreement – including the penalties for breaching the agreement – are spelled out. InsurePal believes this will serve as an additional boost for the blockchain economy, motivating more individuals and businesses to conduct business utilizing the blockchain and digital currencies.
The end result is that insurance will become decentralized due to the agile, self-regulating InsurePal platform. Focusing on responsible individuals drastically reduces costs and helps shift society into a more positive direction. Overall, InsurePal wishes to return insurance back to its core value of trust and consequently expand the mindset of mutual reciprocity.
For more information about InsurePal please visit insurepal.io and download the project white paper.
Do you think social proof is an effective way to curb irresponsible behavior among the insured? Will it enable more people to get insurance who otherwise wouldn’t be able to do so? Let us know in the comments below.
Images courtesy of InsurePal, Shutterstock
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