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Teambrella, the first Insurance DAO, starts in South America and the Netherlands

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An umbrella bearing the Teambrella company logo keeps a person out of the rain, with their feet symbolising the Netherlands and Latin America, the insurance DAO's initial target markets
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Teambrella wants to solve some problems of the insurance industry by eliminating insurance companies. Utilizing smart contracts and cryptocurrencies the Russian developers have built a decentralized insurance platform. Now the first projects have launched, covering pets in South America and bicycles in the Netherlands. Due to the fees, the developers switched from Bitcoin to Ethereum.

Until now, bitcoin and other cryptocurrencies have mostly demonstrated, that you can build and maintain money in a decentralized way, without states and central banks. That marks a historic innovation, which started a silent revolution that will need decades to penetrate the whole of society.

Money is just the Beginning

For some, however, this is just the beginning. Smart contracts are said not just to revolutionize money, but the concept of a company as a whole. The reason is that with blockchain driven smart contracts you can decentralize any process in which a group of people decides what is done with money under certain rules. The DAO has been an impressive demonstration, that it is possible to use smart contracts to build a complex organization like an investment company – without a company, but just with decentrally organized peers. The DAO failed, but the idea it symbolized lives on. It just started.

One of the most thrilling DAOs is Teambrella. The Russian developers behind the project have worked on the platform, which aims to create a decentralized insurance company, for almost two years. Now they have launched the project with insurance teams in South America and the Netherlands.

Solving Insurance Problems by Eliminating Insurance Companies

“Insurance companies and policyholders have conflicting interests,” the whitepaper explains the problems with traditional insurance, “This is reflected in various bad ­faith practices of the companies, such as unreasonable delays, denial of payment, etc. Though some jurisdictions try to mitigate this by adopting the tort of insurance bad faith, the general public has a very negative perception of the industry. This, in turn, leads to a high amount of frauds committed by otherwise law-abiding persons.” The developers of Teambrella believe that these problems can be reduced or eliminated by implementing a peer-to-peer (P2P) insurance organization. Further, an insurance DAO can bring insurances to areas in which no insurance is available right now.

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The concept of Teambrella is to let peers build groups, for example, to insure bicycles. The peers decide about rules, what is covered, what documents need to be submitted and so on. Formulas from insurance math connect values like risk, reimbursements, and value of the insured object. The members of the team can decide on their own, how much they pay, which is at the same time the maximum amount others pay when they submit a damage by themselves.

When there is a case, every team member can vote in relation to the reimbursement payments it made in the past. To make it more simple to use Teambrella in larger groups, it is possible to give your vote to another member, which receives parts of the reimbursements as a fee. Such “pro-voter” can be a freelancer for insurance companies, which could have the same responsibilities as employees for insurance companies.

The monthly payment of the team members is made in cryptocurrencies on multisig addresses. These addresses are designed in a way that funds can only be released after a defined number of team members signed their vote.

Pioneering with Pet Insurance in Peru and Argentina

After years of development, Teambrella recently started. The first teams are niche cases in South America and the Netherlands. “We are interested to see how Teambrella will work in different contexts and cultures. These first teams are the pioneers; we want to go further in exploring more opportunities for P2P coverage and collaborating with the various communities,” developer Alex Paperno explains.

There are two teams; one connects cat owners in Peru with dog owners in Argentina to insure their cats, in case they get sick or need surgery. The second group covers bicycles in the Netherland, the country famous for its love of this particular mode of transport. Both teams have just started, Paperno explains, “In Peru, we have a team of 80 pet owners, in Argentina and the Netherlands we are still accepting new team members.”

Switching from Bitcoin to Ethereum

During the first years of development, Teambrella used P2SH addresses for bitcoin payments. However, during the past month, the team switched to Ethereum. Paperno explained why:

“While bitcoin was naturally the best choice back then, we did not design Teambrella to be bound by one cryptocurrency. Using bitcoin turned out to be a challenge as long as the fees were growing up to $5, and that is incompatible with our model. If the situation with Bitcoin changes, we may reconsider the decision, though we plan to implement support of ShapeShift soon so we could work with multiple cryptocurrencies.”