This interview is part of our new Blockchain In Insurance series, where we interview the world's leading thought leaders on the front lines of the intersections between blockchain and insurance.
In this interview we speak with Dr. Marcus Schmalbach, CEO of RYSKEX, to understand how his company is using blockchain to transform the insurance business, and what the future of the industry holds.
1. What’s the story behind RYSKEX? Why and how did you begin?
MS: How many other good company stories does this one begins with a coincidence. I was a professor of innovation management but at the same time – due to my former professional career – I managed an institute that dealt with the use of Alternative Risk Transfer solutions. Accordingly, these disciplines formed an excellent cross section for the use of new technologies like e.g. AI & Blockchain in risk and insurance management. With the help of some excellent students, including Tatjana Winter, who is one of the founding members of RYSKEX, initial research and treatment in specialist magazines turned into an Insurtech called RYSKEX – which stands for RYSK EXCHANGE. The official foundation took place in January 2018 and meanwhile we are over 40 people from permanent employees and freelance experts scattered all over the world.
2. Please describe your use case and how RYSKEX uses blockchain:
MS: Although we do not conduct any insurance business, the approach is relatively the same. The risk transfer 2.0 is not only supported by the blockchain but also by artificial intelligence. The blockchain fulfils the requirements to ensure secure payment transactions between the contracting parties, the artificial intelligence assists in premium calculation and the evaluation of the occurrence of loss. Because of the fact that we work with parametric triggers, hardly anything human is needed anymore. We assume that in five years, both the coverage process and the claims handling process will be fully automated. Only the definition of the risks to be insured as well as the loss triggers and the filling of the information required for the smart contract will still be carried out by risk managers. The symbiosis of artificial intelligence and blockchain technology combined in an ecosystem of Policy Holders and Rysk Takers will disrupt the entire insurance industry and redefine the value chain.
3. Could you share a specific customer/user that benefits from what you offer? What has your service done for them?
MS: Especially companies that already use a captive solution or have their own risk management department. You have the expertise and the necessary data in-house to calculate traditional risks like e.g. PRICE risks (Political, Reputation, Innovation Failure, Cyber, Climate Change, Equity) and to define the parametric loss triggers necessary for the Smart Contract. By decimating the value-added chain, we simplify the coverage process and ensure a cost- and time-efficient coverage process at the same time. After pilots with well-known European blue-chip companies we are very happy to be a partner of the DLGA (Distributed Ledger Governmental Association) – an initiative of the state of Vermont, USA. Vermont is the most important captive onshore domicile in the world and we are preparing a blueprint for the use of the blockchain solution for captive insurance companies under the aspects of regulation and legislation.
4. What other blockchain insurance use cases are you excited about?
MS: There are two cases that inspired and inspired us at the same time. One is “Fizzy”, a flight cancellation insurance policy the other is the Maersk case. At Fizzy, I was fascinated by the use of the blockchain solution and the fully automatic claims handling. admittedly, the case is a bit “simply knitted”, but it was the proof of concept of our parametric approach. Maersk is one of Europe's largest shipping company and the use of the blockchain serves as proof of concept for insurance-on-demand concepts. Both approaches are an integral part of our holistic solution and we were accordingly pleased with the market acceptance of these two pioneers.
5. Where will RYSKEX be in five years?
MS: The developments show that our model can certainly determine the future of the industry and our goal is to create a unicorn. However, this is still a long way off and the future will show whether we will still be on the market in five years' time or whether traditional companies such as Lloyd´s of London have overtaken us. We are confident enough to say that we cooperate with very reputable and economically well-off companies that believe in us – ergo, I dare to take a positive look at the globe and say that in five years we have established ourselves in the market.