Propeller is excited to announce our backing of UnoRe, a Reinsurance and risk trading platform built on Polkadot and Web 3.0
What is Reinsurance?
Reinsurance refers to a practice where insurers transfer portions of their risk portfolios to other parties to reduce their exposure to potential payments from large claims. Put simply, reinsurance is insurance for insurance companies.
This allows insurers to remain solvent and recover partial or full amounts paid to claimants, mitigating net liability on individual risks and in particular on catastrophic events which may be otherwise crippling.
The Burden of Catastrophe
Hurricane Katrina remains the costliest natural disaster in the history of the United States and consequently had a profound effect upon both the reinsurance and insurance industries. The economic cost of Katrina is estimated to be upwards of $160bn USD (2020 adjusted) with private insurance companies cumulatively paying out around $40bn USD (2005) on almost 2 millions claims for residential, commercial and automotive damage. This discrepancy in economic damage and insured loss highlights a protection gap arising from uninsured and underinsured losses.
Such events demonstrate the role reinsurance firms play by spreading risk during a catastrophe and an influx of mass claims. Additionally, it stresses the need for innovation in this critical market vertical. UnoRe is positioned drive this innovation through its adaptable blockchain-based reinsurance platform that is host to array of products for consumers, investors and developers alike.
Leveraging Blockchain for Insurtech
With innovation naturally comes risk, however it is this inevitability that renders legacy reinsurers resistant to accepting advances in the insurtech space. The resultant top-heavy and developmentally stagnant industry creates a considerable misalignment of incentives between both insurer and the customer.
Under the guise of fair-value, insurance companies, informed through complex mathematical risk assessments and unilaterally available historical data, hold a considerable advantage over their customers, reaping incredible profit and providing little understanding to consumers in regards to how their policies are costed.
Decentralization and blockchain technology present a unique opportunity to bring transparency to the industry as well enhance operative efficiency, reducing managerial and transaction costs. With smart contracts, the bulk of human administration can be replaced, savings which can be passed onto the consumer.
The team at UnoRe plan to integrate the platform with existing cryptocurrency insurance platforms, taking on portions of their risk profiles. PolkaCover, who offer a suite of insurance products powered by blockchain, represents the first of these partnerships with more to follow.
This presents an opportunity for investment. Participation in insurance risk pools is not normally open to the public, inaccessible behind regulation and capital requirements. UnoRe democratises this market for the average user, offering the opportunity to trade and invest in the associated risk of the insurance industry through the world’s first reinsurance trading platform built on Polkadot.
Users can also engage and participate in the platform through the UNO token. There are a number of benefits and incentives available for those who make use of UNO including discounted purchases of up to 50% for insurance products. Also, claims are settled and paid out in UNO and whilst the option to convert to fiat is available, those who stake their UNO can participate in VIP pools with attractive APYs.
These are just a few standout features UnoRe’s platform has to offer and we are excited at the ways they plan to reinvigorate the reinsurance industry through blockchain. The level of expertise assembled within the UnoRe development team also deserves mention. UnoRe was founded by Jaskanwar Singh and Sujith Sizon, both multi-award winning entrepreneurs and blockchain developers. Furthermore, CEO of the highly successful PolkaCover Kunal Sadani assumes an advisory role.
We at Propeller are confident in the project’s direction with such talent at the helm and are delighted to have the opportunity to collaborate with the UnoRe team as they work to bring their offering to market.
For a more detailed look at UnoRe, be sure to have a read of their whitepaper and visit the UnoRe website and social channels below.