General Questions
What is Ensuro?
Ensuro is the first decentralized, licensed (re)insurer on a public blockchain. We use smart contracts to curate competitive insurance portfolios. We allow anyone to invest in insurance risk and reap its benefits. In addition, by providing access to the insurance market to new players, we fuel innovation for established and upcoming insurance partners
What was the original idea and motivation behind the creation of Ensuro?
We were looking for a way to connect decentralized finance (DeFi) to the real world. Insurance was a good fit for two reasons.
Firstly, an insurance contract is essentially a set of rules: if a loss event happens, as defined in the contract, the policyholder receives a payout. For some insurance policies, this set of rules can be encoded into a blockchain-based smart contract, enabling claims to be paid automatically.
Secondly, recent developments in DeFi allow the capital management aspect of insurance to be automated, while the dramatic growth of assets invested in DeFi represents a new potential source of capital for insurance.
How does Ensuro connect DeFi to insurance?
Ensuro collects capital, in the form of stablecoins (cryptocurrencies tied in value to the US dollar), from DeFi investors, in return for an interest rate. Ensuro uses this capital to provide underwriting capacity to risk partners.
Risk Partners can sell insurance policies in fiat (non-crypto) currencies such as Dollars or Euros. The premium is sent to Ensuro and converted into stablecoins. Ensuro allocates the necessary solvency capital to that policy automatically.
All the capital is invested by Ensuro in DeFi protocols such as Aave. The return that Ensuro can offer to its investors comes from both premium income and DeFi investment yield.
What types of insurance products are suitable for DeFi capital?
Parametric insurance products are the most suited to DeFi capital. For parametric products, a payout is triggered based on an external data source. With Ensuro, a blockchain oracle transmits data from external data sources to Ensuro’s smart contracts, which can automatically execute the payment of a claim to a policyholder.
It is also possible to use DeFi capital for traditional indemnity-based insurance policies, where a smart contract can be triggered by a claims adjuster. Other suitable products include warranty policies and protection policies.
What is the legal framework your products are in?
Ensuro has received an Insurance General Business license and a Digital Asset Business Class T license from the Bermuda Monetary Authority (BMA). Ensuro chose Bermuda because it has an innovation sandbox for new insurance companies and advanced digital asset regulation.
The combination of these licenses allows Ensuro to act as a reinsurance company and use cryptocurrency as solvency capital. The BMA solvency framework has received Solvency II Equivalence status with the European Union solvency regulations and is recognized by the NAIC in the US.
The BMA’s solvency framework is compatible with the equivalent solvency standards, Solvency II, in the European Union and the National Association of Insurance Commissioners (NAIC) regulations in the USA.
In addition, we provide other products, such as warranties, that are considered outside the scope and definition of insurance and are provided from a different jurisdiction.
What are the advantages of Ensuro?
Ensuro's model introduces several meaningful enhancements and benefits across the entire risk transfer chain and to its stakeholders. Let us go through them:
Access to a new asset class
Ensuro offers crypto investors the possibility of diversifying their investment portfolios by providing opportunities with a low correlation to traditional and crypto market trends.
Consistent with the DeFi ethos, Ensuro plans to expand the possibility of investing in insurance risk to retail investors. Currently, access to this type of risk is denied to retail investors and is cumbersome to administer even for institutional players.
Liquidity providers (LPs) have complete visibility of the type and nature of the risks to which their capital is allocated and real-time access to the investment's performance. This is not the case when considering similar investments such as ILS, where the investor has no visibility on the specific underlying risk.
Availability of capacity at a competitive price
Ensuro will be able to provide capital to risk partners at highly competitive terms as a result of its operational efficiencies and higher investment returns and is able (through its technology) to service a largely ignored market sector - new and innovative products which lack industry profile and a track record.
Ensuro will leverage the broader DeFi ecosystem to provide LPs with supplementary investment returns. Indeed, Ensuro's Asset Managers contracts can deploy the pools' capital in other protocols such as Aave or Enzyme Finance. These additional revenue sources can help Ensuro source capital at attractive rates while satisfying the LPs return expectations.
A bridge to sustainable returns and real-world applications
Many crypto investors have generated their returns from DeFi protocols, some of which have been offering unsustainably high returns. These returns are then usually reinvested in DeFi protocols and therefore form a continuous investment loop. Recent crypto market gyrations have resulted in the liquidation of some of these protocols offering unsustainable returns and have encouraged investors to look to reinvest their crypto returns in real world assets.
Ensuro provides a bridge for those DeFi investors by offering the opportunity to invest in insurance risk and value added products.
Automation & Web3 technology introduce new efficiencies.
Ensuro's smart contracts manage policies in a completely automated fashion. This feature helps to reduce operating expenses and these savings flow down to the risk partners in the form of cheaper capacity. The savings originate mainly from eliminating claim and underwriting expenses (no costly claims and underwriting teams, loss adjustment expenses) and streamlining administration systems. The transparency and immutability of data stored in the blockchain results in a simpler audit process (resulting in lower audit expenses) and quicker reporting processes for finance teams.
The automatic, transparent, and trust-less verification of a policy's trigger reduces the possibility of fraud. By eliminating manual involvement in the claims process, it also reduces cost and the capacity for human error.
Real-time monitoring
Ensuro has developed a dashboard to monitor products' performance in real-time. Ensuro's analytics dashboard is available to the management team, risk partners, auditors, regulators, and all stakeholders in general. The data on each policy covered by Ensuro is stored on the blockchain and is publicly available, allowing stakeholders to create their own customized analytics. This technology is a 'game changer'. For context, a traditional reinsurance carrier would typically have to wait 3 or 4 quarters before having any visibility on the performance of a program. Real-time access to data means, among other things, that management and partners can take corrective actions (e.g. repricing) very quickly, to minimize any potential loss deterioration or indeed, maximize profitable opportunities.
Do you have a token?
Our token is not available yet. Should the team decide to issue one, an official communication will be released on Ensuro's official channels.
What is the price of the Ensuro token going to be?
We do not speculate on the price of our token.
Is there any risk?
No platform can be considered entirely risk free. The risks related to the Ensuro platform are the smart contract risk (risk of a bug within the protocol code) and underwriting risk (risk of incurring a loss on the risks being underwritten) also known as insurance risk. Every possible step has been taken to minimize the risks as much as possible-- the protocol code is public and open source and it has been audited twice, most recently by Quantstamp.
Which communication channels do you use?
Telegram | Discord | Linkedin | Twitter
Additional information and resources about Ensuro
Feel free to refer to the White Paper for a deeper dive into Ensuro Protocol mechanisms. Developers can access the documentation for a technical description of the Ensuro protocol.
Last updated