Blockchain-based platform hopes to revolutionize premium pricing

Platform utilizes social proof to potentially lower insurance premiums

Blockchain-based platform hopes to revolutionize premium pricing


By Lyle Adriano

A start-up believes that it can revolutionize the way consumers pay for insurance premiums by utilizing a blockchain platform.

The insurtech company, InsurePal, is looking to develop a “blockchain-based decentralized insurance platform” that is powered by what it calls a “social proof guarantee.”

Typically, even the most responsible customers could end up paying for higher premiums in order to subsidize the risk of insurers for other policyholders that make more claims. InsurePal believes this dynamic, which some might even call “unfair,” can be fixed with its new system.

InsurePal is building a self-adjusting, blockchain-based platform that uses social proof to simulate better behavioral patterns. This means that the company’s platform only allows policyholders that have been endorsed for their good behavior by those already in the program to join. This system can potentially lower costs for all customers in the platform, while rewarding incentives to those policyholders that endorsed new members.

The system can be self-regulating, to a degree, as the person who makes the endorsement will be held financially responsible for an at-fault claim filed by the individual they endorsed.

InsurePal gave an explanation as to how its social proof system works: Mary endorses John to be a dependable and safe driver. InsurePal then offers John an insurance policy that saves him $400 a year, while giving Mary $100 in IPL tokens (InsurePal tokens) for her to either use, sell, or retain as an investment.

If John is in an at-fault accident, Mary will be charged $550 – the $400 savings offered to John, the value of the $100 she would have received in IPL tokens, and a $50 penalty fee. If no accidents occur within the span of a year, both parties get to keep and enjoy their benefits.

Due to Mary putting herself at financial risk vouching for him, John will be motivated to moderate his behavior – this is social proof in play, the company elaborated. reported that although InsurePal’s innovative approach to insurance harnesses the Ethereum blockchain, the concept of social proof is at the start-up’s heart. The company has filed for a patent regarding the use of social proof methodology within the US and throughout the world.

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