Bitesize InsurTech: iXledger
October 27, 2017 Chris Sandilands
iXledger is a blockchain-based (re)insurance placement platform.
The business was founded in 2017 by Ingemar Svensson, who has a background in financial services software and capital markets. The company raised an undisclosed (“the equivalent of Series C”) through an Initial Coin Offering (ICO) in July 2017.
ICOs in under 100 words
ICO “investors” buy tokens. Tokens are equivalent to privately issued bitcoins. The issuer defines the value of a token, for example privileged access to the issuer’s product, profit share in the business. For iXledger the tokens are used within the marketplace as currency to settle platform fees (but not for the (re)insurance transaction).
Early investors are buying into the belief that the value of the tokens will increase as platform use increases. ICOs are attractive for startups because they do not give away management control, and (as they are unregulated) have fewer strings attached and compliance issues than other sources of funding.
Users of the platform (which serves both insurance and reinsurance) can:
- List, market and negotiate insurance products
- Execute transactions using secure blockchain-based contracts
- Gain insight on, and manage, portfolios through sharing of data on the platform
- View summary statistics of the insurance market not currently available in a physical marketplace.
According to the company, the value to cedents will be access to a greater range of (re)insurers and lower transactional costs. The value to (re)insurers is (1) faster transactions (e.g., smart contracts, data sharing), and (2) increased data reliability and granularity.
iXledger earns money through fees for certain actions (e.g., listing a product, transacting, uploading data), which are charged through to an e-wallet of the user’s tokens. As usage increases demand for tokens should increase and hence their value, benefiting early users.
iXledger sees the marketplace as a tool to accelerate blockchain adoption amongst insurers for claims and policy management. They say that with enough participation, online markets can also disintermediate brokers, although in certain markets they may still play specific roles (e.g., structuring).
The company is in the process of onboarding Gen Re for life and health products (press release).
The Oxbow Partners view
Vested interests in maintaining the current market structure are strong. Online platforms depend on the presence of buyers and sellers to succeed. Previous attempts to make the speciality / reinsurance markets more efficient (e.g., RI3K) have not been successful.
Does blockchain or iXledger change this? Blockchain potentially brings some advantages over previous platforms, but it’s not clear that any of these trump the challenges of entrenched market interests. Indeed, we think the blockchain proposition may also be too complicated for many of the (re)insurance community to get comfortable with, and so the company will need to find innovative niches for early traction. Time will tell whether these niches exist and are big enough for the business to thrive.
That said, agreeing a partnership with GenRe’s in year 1 is a huge win – as is the ICO fundraise which gives the company considerable runway.
The business reminds us of Teambrella (Bitesize), another blockchain-based placement platform (targeting personal lines).
