Everyone knows – or has some idea – that understanding insurance is a task and a half. If you are one of our readers who feel they have gotten the short end of the stick, either because you have spent too much time trying to understand insurance for yourself, or a family member, or a business, we certainly can relate to you as we have also.
Even worse is when you’ve needed coverage from an insurance policy and it hasn’t worked for you, or it has run out, or you weren’t able to get it in the first place. That situation has happened all too often in many peoples’ lives: as an individual, a small business owner, a traveler – you name it. Insurance policies always seem expensive and you’re never 100% sure you have the right coverage you need.
Insurance, Risk, and Uncertainty – Three Words that always appear Together
One of the issues that makes insurance policies extremely confusing and inefficient, is that it involves risk. Risk involves uncertainties, and markets do not like uncertainty. Insurance companies have to do risk pooling, which means guessing that people or businesses with lower risk are put in the same group with people with higher risk. At the end, almost everyone is unhappy, with the possible exception of insurance companies.
And then there are Problems with Information
Insurance markets also grapple with information problems (asymmetric information, to be precise). Asymmetric information is not simply private information. All sides can and do have private information. However, you can make private information public, in a way that everyone can understand. Asymmetric information is when one side has private information that is impossible to convey credibly through a marketplace, even if one wanted to.
The problem of asymmetric information was first written about in a very famous paper by Akerlof, The Market for Lemons (1970). Akerlof’s insight was rejected at first and then recognized as so important, he received a Nobel Prize in 2001. Akerlof’s story is one of the best come-from-behind stories in all of academic economics.
Geeq’s Blockchain makes a Fundamental Contribution
As a technology company with a uniquely decentralized and secure data service, services on Geeq make it possible to credibly rectify some asymmetric information problems – which provides previously unthinkable ways to refine grossly inefficient insurance markets.
The Geeq Advantage
As many of our readers and supporters know, Geeq is a different blockchain technology because it enables these features:
a) Individual companies, developers, or specific kinds of IoT devices can log transactions on a ledger called a blockchain so that their business records and information can be completely separated from each other (thanks to Geeq’s unique multi-chain blockchain platform);
b) The validation of each blockchain is outsourced to Geeq’s anonymous, decentralized network, which dramatically reduces the adoption and ongoing costs of blockchain-as-a-service – in particular, no business blockchain has to share overhead with another; and
c) Each blockchain’s records are protected by Geeq’s proprietary Proof of Honesty which is more secure from hacks and manipulation than any other blockchain protocol we know of (private or public), thus providing a continuously available auditable record, that is efficient enough to record large streams of data from IoT devices.
Value Proposition: Insurance Contracts based on Verifiable Information
What does that add up to, in an insurance context? Verifiability of information, by both parties involved in an insurance event, to an extent that simply was not possible before. In other words, Geeq blockchain as a service can be used to provide inexpensive, auditable records that, in certain use cases, could be considered independent of bias and therefore acceptable to all concerned.
As Geeq Chief Economist John Conley describes here, the easiest cases to imagine are those that depend on IoT data being backed up on the Geeq blockchain. If a company agrees to connect its IoT devices and has the data recorded on Geeq’s public blockchain ahead of time, both the company and the insurer might write contracts based on knowing that information will always be available to both of them. The IoT device’s blockchain record will show that an event did or did not happen. As long as the risk was correctly built into the contract, there will be no need for costly disputes, litigation, or audits – which will improve efficiency and remove the time taken up by each side blaming each other and delaying payments.
At Geeq, exciting things are being made possible by Geeq’s innovative blockchain technology. One of them is a way to provide verifiable records, that can help to eliminate information asymmetry, reduce uncertainty, lower costs, and improve information in insurance markets in ways that have never been possible before.