Blockchain based ‘social proof’ start-up advised by former Direct Line COO
InsurePal, a new peer-to- peer insurer offering lower premiums for those able to gain
‘social proof’ guarantees from friends and family, is raising $18m (£15m) in an Initial
Coin Offering (ICO) to fund its UK motor launch in H1 2018.
Key advisers to the company include former Direct Line COO Damian Arnold and
Lloyds of London veteran Tom Manson.
Using the Ethereum blockchain platform as a technology base for transactions,
InsurePal uses a form of peer pressure, or ‘social proof endorsement’, to encourage
and sustain better behaviours – such as safer driving - among policyholders.
By accepting only risks that an endorser guarantees with a financial commitment,
such as credit card details, InsurePal is able to offer a lower premium for the insured.
Endorsers are rewarded with tokens which may be used for their own discounts, sold
or kept as an investment.
While social proof is not new as a marketing tool, it has never before been
reinvented for the insurance industry. InsurePal has filed, for patent protection in
the US and worldwide, the approach of arranging an insurance policy with an
endorser – “A method and device for determining premium rates and discounts for
insurance customers” – 24 August 2017.
InsurePal is targeting millennials and tech-savvy crypto enthusiasts – these will make
up 75% of the workforce by 2023. Virality and social media play a crucial role in their
buying decisions.
Co-founder and CEO Matt Peterman, latterly from insurance detection company
Salviol, says:
“Insurance is a $7.3 trillion stubbornly old fashioned goliath that could significantly
reduce premium prices if its model could allow it to operate with lower risk clients.
“In the case of InsurePal, the social proof that benefits these responsible clients
with big discounts also carries embedded value in its underlying IPL token
currency.”
The ICO will close on 16 January 2018. InsurePal’s motor pilot is expected to be
followed by schemes for property, casualty, life and health.
How it works
- John is a safe driver, paying $1000 a year for car insurance
- Mary vouches for John, guaranteeing him with her credit card details
- John receives a $400 discount from InsurePal
- Mary receives, for her endorsement, $100 in InsurePal (IPL) tokens to use for insurance, sell or keep as an investment
- If (and only if) John has an at-fault accident within a year, Mary is charged $550 (John’s $400 saving + her $100 of tokens + a $50 penalty)
- Social proof for John is backed by Mary’s financial risk
- John has an incentive to remain low risk
- Long term benefit to society from responsible consumer behaviour
InsurePal is the next generation of peer-to- peer insurance based on social roof endorsements, fully harnessing the power of blockchain innovation. It will serve as a replacement for insurances as we know it, offering a completely new type of cover for areas of life and business that began to emerge with the evolution of blockchain and transactions being carried out on the distributed ledger.