The life insurance industry generates billions of dollars in premiums every year. In 2016 alone, the total market size for premiums in the OECD region (40 reporting countries) was more than US$3.86 trillion dollars. Emerging Asia will be the fastest-growing market for life insurance with an estimated real compounded annual growth rate of 10.2%.
As an oligopoly, insurers have traditionally been able to benefit from the opacity and byzantine operating standards of the sector. One of the many examples of this is the inability of the insured to monetize their policies.
Most people do not realize that policies with cash value can be traded in the market for a higher cash value, that is, an individual could sell his policies to a third party instead of surrendering the policy. In 2014, policy lapses and surrenders were in excess of US$112 billion dollars in the US alone, of which it is estimated US$57 billion (250,000 policies) could have been resold in the market.
There are many advantages of buying an insurance policy on the open market. For example stable returns (superior to a similar asset class with the same risk ratings); fixed tenure; liquidity; and low correlation with other asset classes.
The minority of policyholders who know they can extract higher value from their policy face challenges in finding interested buyers as there is no recognizable marketplace. Buyers looking to add policies to their investment portfolio are confronted with similar, if not more, barriers to safely executing the purchase.
The disintermediation of the industry is also necessary on the after-service fulfilment of the insured. Many traditional companies have focused on creating value using technology to enhance periodic portfolio review, advisory or record keeping, but there is a bigger opportunity in ensuring the immutability and the peace-of-mind transition when the unfortunate circumstance of a claim arises. Whether the policyholder is an individual or a company, the fact remains that many individuals do not update their next of kin or beneficiaries when they change their portfolio or will.
This is also the case for companies due to employee turnover. The individuals who purchase and maintain the policies rely on practices that are handed over without a comprehensive understanding of the necessary obligations and task, relying on agents or third-party advisors to assist when the need arises. Agents and advisors themselves change over time, resulting in late premium payments, void claims and a biased portfolio that does not serve the current needs of the individual and company.
fidentiaX is the world’s first marketplace for tradable insurance policies. Our vision is to create a trading marketplace and repository of insurance policies for the masses by leveraging blockchain technology. This blockchain-powered marketplace will provide a trustless, immutable, auditable and transparent environment to disrupt the status quo. fidentiaX Open Source Foundation (FOSF) will be setup with the mission of proliferating the adaptation of blockchain technology in the Insurance Industry.