Returning the power of insurance to the people

We, the people, once held the power of insurance. And we can again thanks to blockchain technology.

Communities initiated the concept of insurance when they pooled their resources to protect individuals from the risks they all faced. This kind of insurance works better the more people there are in the pool because the numbers are more reliable. But it isn’t scalable because it is a trust-based system and the network of individuals trusted by everyone in it only extends so far. Hence traditional insurance companies emerged.

Fast forward to 2018 where people are becoming increasingly distrustful of anything inauthentic or that only serves the few in charge. We live with information at our fingertips and can now use that information to challenge and develop the traditional ways of doing almost anything. It seems strange to think that we would continue to pay for insurance in the same way we have been for so long.

Using a traditional insurance company means putting your trust — and money — into an organisation which is owned by other people and designed to benefit those owners.

Hugh, our founder, understood this doesn’t have to be the way. He has worked as an actuary in insurance for over 15 years. He became interested in blockchain and cryptocurrencies in 2011 and realised that he could combine his interest in blockchain with his experience in insurance to create what is now Nexus Mutual.

Major earthquakes (greater than magnitude 7) happen about once a month and smaller ones occur several hundred times a day. People in high risk areas often can’t insure themselves because of cost, access or complicated policies. Nexus Mutual was created to solve this by providing simple and cheap cover that pays out when an earthquake occurs.

We realised we could build a mutual (an organisation owned by its customers) on a platform where individuals only need to trust the system, not everyone in it (blockchain). Specifically, we could see a solution to the problem of agency — where an insurer looks after customers’ money on their behalf. No one person or entity owns Nexus Mutual — every member does. We also saw this as an opportunity to provide significant cost savings compared to the traditional insurance model.

Currently we can’t make earthquake cover accessible to everyday users because the technology isn’t fit for purpose yet. But we wanted to create an initial product; one that could be used straight away. So, in the meantime we are working on smart contract cover. Smart contract security is a huge risk for the Ethereum community and we want to protect the users and developers against the consequences of bugs.

This is the start of our journey to providing our members with more simple, transparent, accessible and cheaper financial protection against their risks.