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 Damir Kervina, Chief Product and Operations Officer at VouchForMe, 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 VouchForMe? Why and how did you begin?
DK: VouchForMe was born out of an ambition to make insurance and the way people go about it more personal and responsible. You see, the idea of insuring risk had been around long before someone started the first real insurance company. In the old times, people who knew each other were putting some of their money aside together, and they had a deal that the pot is used in case someone gets robbed, loses everything in a fire and such. Naturally, you’d want to share the pot with someone responsible who locks their doors and puts out the fire before going to bed. Also, false claims practically didn’t exist. You thought twice before putting your friendships and reputation at stake, plus you were likely to get caught anyway.
When insurance companies came around, such communities became “portfolios” and got huge. Individuals suddenly felt anonymous in the mass and started acting differently: they got less diligent and more fraudulent. And who’s paying the bill? Well, the insurance companies simply add it to everyone’s premium.
So VouchForMe wants to change that. We are bringing the community element back to insurance to make people more responsible and their premiums lower.
2. Please describe your use case and how VouchForMe uses blockchain:
DK: In a nutshell: using VouchForMe, you ask other people to help you pay a part of your insurance deductible in case there is a claim. Of course, not everyone you know would take that risk, but people who care about you and trust you might do it, just like in the old times. What’s crucial, other folks vouching for you tells a story: you are probably a low-risk customer who deserves a lower premium. And if you later vouch for someone in return, this slowly creates a network of diligent, safe drivers we all benefit from.
In VFM, we use blockchain technology in two ways. First, our token, IPL, can be used as a payment method when you pay the fees for using our platform. Second, we are using the distributed ledger as an alternative data store that works independently of our otherwise web-based platform. Guarantees that are given (and collected in case the deductible has been covered) are recorded on the blockchain and signed by individual users.
3. Could you share a specific customer/user that benefits from what you offer? What has your service done for them?
DK: Some of the testimonials are pending publication consent, while others are off limits due to exclusivity agreements with media outlets. But I can share a typical one with names changed.
Peter is a cautious driver, but the insurers only saw him as a young, inexperienced male. The best insurance price he got was €1100 a year, way out of his price range. However, he had the option to lower his premium to €770 (30% discount) by taking a €1000 deductible. This was OK, but in case something happened, he’d struggle to cover the deductible without a loan. So, he turned to his friends and family via VouchForMe. Knowing him best – they’d seen him drive, they knew he was careful – they agreed to vouch, meaning they guaranteed to cover either a part of or the entire cost of the deductible, should an accident occur. His friend Sarah vouched for €50, his Grandma offered €200, in the end, Peter had five people offering to cover a total of €500. VouchForMe created agreements between Peter and his backers and will help him collect the guarantees from his endorsers if there’s a claim. Bottom line, Peter’s insurance got affordable and he is likely to remain careful.
4. What other blockchain insurance use cases are you excited about?
DK: Personally, I’m most excited about cases where blockchain is used to protect liberties such as freedom of speech and economic initiative. Being less controllable than classic IT, blockchain has the potential to help people defy oppression and censorship. What needs to be overcome though is the fact that blockchain still relies on internet connectivity. Once someone like Google with their envisioned internet balloons or something makes connections ubiquitous, meaning not at the mercy of corrupt governments, the technology will be able to deliver what I think is its most noble cause.
Anyway, even in developed parts of the world without such pressing issues, blockchain can show how we can optimize our existing procedures in insurance, banking, governance etc. There are some dinosaur organizations out there and while we should cherish the reliability and safety they offer, it doesn’t hurt to poke them a bit where stuff can be done faster, cheaper and more transparently.
5. Where will VouchForMe be in five years?
DK: Hopefully in several places where it can structure trust and responsibility that results in people getting something good in exchange. I think there is a lot to be done in insurance, not just motor, also areas such as health and disability seem very promising. At VouchForMe we are certain they can be made much better by adding the community element to the mix.