The insurance business is the latest sector to come under the scrutiny of disruptive technology from the Ethereum Blockchain, with Umbrella Coin hoping that decisions on payouts can be done securely on a trustless network, thereby avoiding the middlemen.

The world of insurance operates in a space full of out-of-pocket costs, such as deductibles and excesses. Umbrella Coin is looking to enter that space by employing smart contracts to do the work of middlemen, hopefully reducing the costs.

Additionally, instead of decisions being made by insurers looking to protect their bottom line, users who are both the insured and the insurer's on Umbrella Coin’s UMC network, under active development for the moment, will be the ones making the decisions on claims.

Cutting out the fat middle

There is a lot of money and work that goes into deciding payments on claims in the insurance business, and this cost is almost always incorporated into fees and premiums as these middle men are paid to decide.

However, Umbrella Coin believes there is the possibility of cutting out this additional work through smart contracts, and with that, some of the out-of-pocket fees of insurance are expected to fall.

These are not the only reasons why insurance can cost so much, or why it can affect people’s out-of-pocket expenses when making claims, but they play a role.

The vote of the people

The idea from Umbrella Coin is that if the middle men are no longer present, fees should drop and claim decisions will be made for the correct reasons, not just in order to protect the bottom line.

Making UMC holders both the insurers and policyholders will see those who are insured voting on other’s claims, essentially deciding if payment should be made.

There can be red flags, as democracy in itself can be subject to collusion and manipulation, but according to CEO Terry Tata, there are incentives for the population to pay out:

“Ideally, we’d want everyone to know we’re trying to keep everyone on our end solvent, so denying someone else’s legitimate claim doesn’t help their claim in any way.”

However, Umbrella Coin recognizes that this may not address everyone’s concerns, so they plan to introduce rewards and punishments:

“We intend to provide some incentives in the form of a reduced cooling period, and an increased maximum amount attainable for good “citizens” of our democracy who execute their civic duty in a timely manner and with good results.”

Breaking the walls of insurance policies

At its heart, an insurance policy is a complicated benefit payout for when an event occurs that necessitates funding. It is that complication that has led to many feeling irked by insurance, and setting the sector up for disruptive technology.

Umbrella Coin’s aim seems to be to slowly break the barriers that insurance put up, and by using self-executing smart contracts, peer-to-peer benefit pay outs and democratic decisions, there will hopefully be a lot less mystery around this convoluted form of money management.