The application of Blockchain technology to nearly every major market is setting its sights on some of the biggest industries in the world. From the hotel industry to the field of mobile payments and beyond, Blockchains are being integrated into economies worth trillions of dollars. Furthermore, Blockchain is bringing new possibilities to these markets and vastly increasing the potential revenue streams available.
Given how intertwined Blockchain technology is with fintech it is not surprising that banks and other financial institutions are reaping the initial benefits of this technology. But the next step of crypto’s development is likely to be driven by the proliferation of smart contracts. One of the most promising applications of smart contracts is in insurance, where the rule-based automation afforded by smart contracts makes entirely new products possible.
Insurance policies are thus being dragged into the 21st century. But the insurance industry lacks the same trading possibilities as other financial instruments. Consider how debt, bonds, futures and other financial products are traded on markets, enabling owners and investors to profit and hedge from their use.
This is particularly true for life insurance policies. People with these policies often do not even know that if they want to (because of a need for a cash injection for example) they can sell on the policy to either the company they took it out with or a third party. In the case of a third party, they don’t need to continue paying the premiums – the new owner takes over the policy and gets a payout when the policy matures (the main source of revenue from the policy) or when original holder passes away.
Many policyholders do not widely know this, and those that do know are often dissuaded by a lack of transparency and low returns. Given the Blockchain-friendly nature of insurance as well as how well it can facilitate marketplaces, it is no surprise that some forward-thinking entrepreneurs are looking to apply Blockchain to the trillion-dollar life insurance policy market. FidentiaX is a Singapore-based crypto project that wants to achieve this with their upcoming launch.
The life insurance market – a long way from optimality
The fact that most life insurance policyholders aren’t even aware of the resell value of their policies says a lot about how ripe for disruption the industry is. But this is not the root of the issue. On a more fundamental level, the existing marketplace contains a lot of inefficiencies even when a customer wants to sell their policy. Not only is it heavily constrained by location, but there is also a lack of a means to link up with different investors even in larger markets.
This is the primary issue that fidentiaX wants to address – addressing the inefficiencies of the market and our Blockchain powered marketplace allows secured and transparent transactions between buyers and sellers.
Aside from that, the life insurance market is hampered by accessibility issues. From an investor perspective, the means to start trading and investing in life insurance policies are almost non-existent outside of investing in an existing company. The regulatory barriers and inconvenience are simply too high.
Using Blockchain to make the process easier
Since insurance policies constitute well-structured and rule-based agreements, they are particularly suitable for enhancing with smart contract features and being listed on an online marketplace. FidentiaX want to leverage a ledger to allow users to compare offers from investors easily, investors to group and trade the policies they have invested in and all parties to communicate in a more transparent and hassle-free way.
Users will put up their policies for auction, and after purchasing the bidder can either choose to cash out the policy with the user’s insurance company or more commonly add it to their portfolio of investments. And furthermore, once a policy has been purchased by an investor they can allow other investors to view their portfolio to potentially make an offer. This is all enabled on the fidentiaX Blockchain using the fdX token.
FdX tokens are used for payment of membership fees and internally on the marketplace. Aside from this, the ISX token is a platform unified token used to facilitate trade since ISX is pegged to $1 to minimize FX risk and address money-laundering risks.
In order to stimulate the marketplace to begin with, the company is going to purchase and list a sizable amount of policies on the platform initially themselves.
A team with experience
In an industry where both users and investors are understandably wary about issues like security and reliability, it is important that a trustworthy team lead the way. The management of fidentiaX, headed by Douglas Goh and Alvin Ang, has more than 30 years’ experience accumulated in the finance and insurance industries. Furthermore, being located in Singapore puts them in the ideal location to capitalize on the growth of life insurance resale market in East Asia which is set to boom in the next few years. The team has lofty goals for the platform, in their own words:
“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.” The fidentiaX Crowd Token Contribution starts on Nov. 6th.