Eventually, every individual is obliged to join an insurance company to cover yourself for the costs of for example damage or injury. Problems of such insurances are, amongst others, the high premiums, even though you might not even need insurance that year and bureaucracy. Wouldn’t it be great if you were able to set the price, rules, premiums and claims yourself together with a group of people?
Teambrella is a platform that is designed for peer-to-peer insurance service and backed with Bitcoin. Users have exclusive control over all the aspects of insurance to make it fair and transparent and to cope with the inefficiency of current insurance services (Kastelein, 2016). Users are able to form or join teams of different sizes online to cover each other and in which each peer is both a provider and consumer. The teammates decide how risky each person is and pay according to that.
The framework includes a decision-making layer, which consists of a server for communication and voting, and a payment layer, which is based on Bitcoin technology. The voting process exists to make sure all users have mutual control over the insurance, including new members, risk evaluation, rules and processing of payments. It is also possible to appoint proxies to vote on your behalf, but you have the casting vote. When you pay more for other teammates’ claims, your vote weight grows. Bitcoin is used as a mean of providing coverage and payment of reimbursements in order to ease the burden of payments. Each premium payment is a partly reimbursement of a claim and these payments are enforced by distributed wallets that prevent spending that is not sanctioned by the other peers. After voting, the servers automatically prepare a set of transactions from these distributed wallets of the providers to the submitted claim of the user (Kastelein, 2016).
The utility for the consumers is the fact that it is easy to use and access is available anyplace and anytime. It is free to sign up and consumers have full control over getting certain claims funded. Besides that the investments are very low. Consumers are able to get insurance at low costs and keep all the invested money when no claims are submitted. Additionally, the providers are able to vote which claim to back, so they perceive all the incurred costs as fair and they only pay for trusted members. In this way, users will be willing to switch to Teambrella, because it maximizes the joint profitability.
Teambrella is feasible and takes care of several institutional arrangements. The platform is fair, because it enforces the Golden Rule of ‘treat others the way you want to be treated’ and it aligns every teammate’s interest. Besides that, the platform is transparent. You see where the money goes and every decision in the team is made by discussion and voting, so every user has control. Furthermore, the platform is affordable, because no middlemen are present (teambrella.com, 2017). Also, the platform takes care of several concerns about security, privacy, fraud, failure, hacks, scams and bitcoin volatility. Finally, the founders calculated several coefficients and ratio’s, which make the platform solid (Paperno et al., 2016).
Also the institutional environment is taken care of. No contracts, obligations or policies are present. Teambrella is no business of insurance, so does not need a license. Furthermore, Teambrella resolves conflicts through its own tool; the alignment of interests and standards of treatment.
Teambrella makes non-transparent insurance companies unnecessary and opens up a completely new field of trustworthy and demanded peer-to-peer markets.
Kastelein, R. (2016) ‘Teambrella – A Peer to Peer Insurance System Using Bitcoin. Retrieved from: http://www.the-blockchain.com/2016/05/09/white-paper-teambrella-peer%C2%AD-to%C2%AD-peer-insurance-system-using-bitcoin/, 10th of March 2017.
Paperno, A., Kravchuk, V., Porubaev, E. (2016), WhitePaper: Teambrella: A Peer-to-Peer Insurance System.
https://teambrella.com, 8th of March 2017.