Considering the substantial interest that Blockchain technology has received in the past 12 months, it is not surprising that entrepreneurs are finding ways to make new markets in areas that can benefit from crypto. In hospitality, entertainment, technology and dozens of other industries, things like smart contracts and decentralized ledgers never existed before, so a whole raft of new products are becoming possible.
Of all industries, finance is the most ready and willing for Blockchain adoption. Just as with the dawn of the internet, expect the rise of Blockchain technology to open up new markets with innovative platforms providing a range of new options for users.
Consider how the internet changed possibilities, making AirBnB and Uber feasible. They opened up the hospitality and transport industries which are now worth $100 bln combined, and several multiples of that value flow through their platforms from customers to service providers every year.
What area of finance will see short-term upheaval from Blockchain implementations? One possibility is interesting precisely because you've never heard of it before: life insurance. What many people aren't aware of is that a life insurance holder can opt to cash in on their policy early, either by "surrendering" it back to the insurance company or by selling it on to a third party who keep up the premiums and then file a claim when the holder passes away.
As it stands, this limited market is inefficient and underserved, and a Singapore-based crypto team are hoping to change that with the fidentiaX platform they are launching shortly.
Life insurance reselling
A Blockchain platform could address the considerable inefficiencies and constraints in the market. Most important of these is the underserved market for reselling. There are simply not enough life insurance holders who are aware of the reselling industry, which results in a lack of policies for investors to purchase. FidentiaX plans to do two things to help this; they will make reselling easier and will also centralize the entire market onto one platform where offers and prices can be more easily compared.
This central platform will also benefit from network effects: the life insurance reselling market is currently fractured regionally because of differences in regulation. A worldwide platform would allow investors to apply economies of scale in order to make their activities more globally efficient. Most notably, in many cases the buyer and the seller both need to be physically present to make the transaction, which obviously puts serious limitations on what can be sold to whom.
As it currently stands, policyholders often end up needing to jump through hoops to secure a sale and often end up with a price below market rates. Price comparison is difficult at the best of times, and the sensitivity of the involved data makes confidentiality a big concern.
This leaves customers stuck with sales people that create a difficult experience, as one industry publication noted:
“The Financial Industry Regulatory Authority warns that the life-settlement industry can be prone to aggressive sales tactics and abuse.”
Typical use case
Into this market comes fidentiaX, who believe their platform will help in several ways. They outlined a typical use case for their platform:
- LISTING - Policyholders looking to extract higher value from their tradable insurance policies submits the policies to fidentiaX’s Blockchain-powered platform and gain access to potential buyers. These buyers will then browse the available policies and select ones that meet their investment objectives.
- OFFERING - Interested buyers complete the relevant documentation and deposit funds to the platform. Sellers will be notified that funds are secured and the relevant documentation is transmitted.
- SUBMISSION - The seller, armed with the assurance that funds are in-place, goes to the insurance company to effect the transfer of policy to the new owner. The seller obtains documentary proof that policy has been transferred.
- COMPLETE - Sellers upload the documentary proof of the transfer onto fidentiaX Blockchain. Upon verification, documentation is transmitted to the buyer and funds are released to the seller simultaneously
As you can see, fidentiaX leverages the escrow and smart contract elements of Blockchain technology. Previously this would have been impossible without the time-consuming and expensive input of intermediaries, but fidentiaX is, like AirBnB and Uber, expanding the market with technology.
Marketplaces are a difficult thing to create, but the fidentiaX team is banking on a few things in their favour. First, the founders have track records in the insurance industry, having worked for some of the biggest financial institutions in Asia. Secondly, they are going to get the market started by buying a substantial amount of policies that investors can repurchase as soon as the platform goes live.
The market unimaginable amounts of money, and if fidentiaX can expand this market to underserved investors and sellers then they stand to become a major platform in their own right. The Crowd Token Contribution goes live on November 6th.
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