Blockchain powered pay-as-you-go social security systems by asure.io
Will the states and authorities of tomorrow establish blockchain technologies as the foundation of modern social security systems?
Recognizing the full potential that blockchain technology offers us, one is overcome by this feeling, which many radiate from the community. This feeling of departure. The knowledge that many business cases will change in all areas of industry.
At the beginning of the year 2018, Paul Mizel, Fabian Raetz, and Gamal Schmuck left their career as IT consultants in the insurance industry behind to develop an open decentralized autonomous insurance platform (Asure platform) based on the Ethereum Blockchain.
Vision
Our vision is that “People around the world enjoy their lives without having to worry about any risks or losses.”
Challenges
The world’s state social security systems are facing great challenges. Demographic change and increasing digitalization are creating a great deal of trouble for industrialized nations. At the same time, many countries in the world still have no or very poor social security systems. [1]
Research results show that social security plays a central role in economic and political development in developing countries. People who do not have access to social security systems are at risk of falling into poverty if they are struck by a stroke of fate such as illness, crop failure or disability. They may then have to liquidate savings, sell livestock and other means of production and send their children to work instead of the school in order to finance daily expenses. [2]
People who enjoy basic social security are more willing to invest in education and physical capital, which entail additional risks, but also the prospect of income improvements. Empirical studies suggest that the existence of social security systems, especially in the informal sector, strengthens the propensity to invest and thus promotes economic growth precisely where this best contributes to poverty reduction. [3]
At Asure, we want to contribute to reducing disease and poverty in our world by ensuring that everyone has access to good social security.
First solution — pay-as-you-go social security system based on blockchain
We enable governments around the world to establish pay-as-you-go social security systems and assist in migrating existing ones to the Asure platform so they take advantage of the blockchain technology.
Which social security systems will be supported?
Depending on the state of development, governments offer various social security systems such as
■ pension scheme,
■ health insurance,
■ unemployment insurance,
■ accident insurance, and
■ nursing care insurance.
At Asure, we believe that all these insurance models could be implemented on Ethereum and the Asure platform in a very efficient manner. We will work with governments and support them in implementing their social security systems.
Social security systems can be funded by capital, via tax receipts, pay-as-you-go systems and a combination of them. [4]
Why pay-as-you-go systems?
Pay-as-you-go systems are successfully used to fund social security systems. Premiums will be used to pay benefits directly and no or a small reserve is build. Countries, in difference to private insurance companies, can guarantee continuous premiums by making social security systems mandatory and therefore don’t need coverage capital.
Since no capital has to be saved with pay-as-you-go systems, the first generation is also directly entitled to payouts without ever having paid premiums (unfunded liability). Therefore, pensions can be paid immediately after introduction. [6]
Why on blockchain?
An unchangeable and verifiable history of transactions is of great relevance for the pay-as-you-go systems, and the blockchain as a technology brings it directly with it, you’ll never need paper to lose again.
Operational costs of the german pension system are more than three billion Euro in 2017 [7]. Due to the high degree of automatization, the blockchain can be used to reduce costs and increase the value of social securities by using the information that accompanies social security systems.
Transparency in social security systems also means that governments’ reputational advantages will increase. Trust in a social security system becomes less dependent on trust in the authorities, but can be verified by everyone through the use cryptography. The available data create new possibilities for the development of social insurance based on artificial intelligence. For example, data can be used in predictive models to predict the demand and success of social insurance by using new insights into relationships and causalities. As a result, further improvements and possible risks can change better forecasts.
We see single points of failure all the time in the form of outages, data breaches and data leaks of centralized systems. In decentralized networks, no one node going down can take down the entire network, so no matter how many users come and go, Asure platform should remain up and running. All data are cryptographically coupled and forgery-proof.
Asure — Proof of Concept (PoC)
Soon, we will publish our PoC of the german pension system which demonstrates how to implement and how to take advantage of the blockchain technology to implement social security systems.
In order to establish social security systems on Ethereum and the Asure platform, many problems have to be solved.
Our PoC will show how the administration and calculation of pension points can be represented by a smart contract. Also, we will demonstrate how premiums and withdrawals could be paid using cryptocurrencies.
Here are some of the questions which we are trying to answer:
■ What preconditions must be met for states to consider implementation on a public blockchain technology like Ethereum and the Asure platform?
■ How can blockchain-based social systems be reformed?
■ How is it determined who can carry out reforms?
■ Which oracles are needed and who provides them?
■ To what extent are social systems implemented on the blockchain?
■ For example, are only the pension points managed with the help of the blockchain or are contributions also paid in a cryptocurrency?
■ If so, what currency? Is a stable coin used? For example, would euro states accept a stablecoin that couples to a FIAT currency other than the euro?
■ How are identities and their claims managed?
■ Which data should be stored in the blockchain and which not?
■ What must be taken into account with regard to data protection?
Further details about our PoC will be published in an upcoming article.
Asure platform
For the efficient development and operation of social security systems we use and recommend the Asure platform.
The Asure platform offers standards and infrastructure for an open and decentralized insurance marketplace based on Ethereum. It brings all market participants together and creates the largest global community in the blockchain insurance industry. The Asure platform enables individuals and insurance companies to design, develop, sell and reinsure a wide variety of insurance products. The platform supports all business operations such as consulting through modern technologies such as Machine Learning (ML), Artificial Intelligence (AI), Internet of Things (IoT), Predictive Analytics and ChatBots, but also through insurance consultants if desired.
To learn more about the Asure platform, visit our website or subscribe to our newletter.
Team
The Asure team is a group of insurance and technology experts with decades of experience in the industry, led by our founders. We have worked on cutting-edge blockchain-based projects and projects with the focus on artificial intelligence in the context of insurances.
We are currently in the process of establishing a foundation as an organizational form in Switzerland. The purpose of the foundation is the research, marketing, and development of the Asure platform.
Paul Mizel
Paul holds a Master’s Degree and has over fifteen years’ experience in IT and especially in insurance industry. Former Head of Innovation at Insurance Consulting Company BROCKHAUS AG. He and his innovation team in Germany and in Ukraine worked on artificial intelligence and blockchain-related projects since 2014.
Fabian Raetz
Fabian has been working for more than ten years’ at BROCKHAUS AG. In Paul Mizel’s innovations department he researched cutting-edge technologies to improve the insurance industry. In his spare time, he supports a number of open-source projects.
Gamal Schmuck
Gamal has over five years’ experience in insurance industry and authorities. He is responsable for the administrative, financial, and risk management operations of the foundation, to include the development of a financial and operational strategy, metrics tied to that strategy, and the ongoing development and monitoring of control systems designed to preserve foundation assets.
The Asure team is a group of insurance and technology experts with decades of experience in the industry. Needless to say the team at Asure loves insurance and technologies that will change the world!
We are looking forward to the many exciting challenges that lie ahead. To becoming a part of this wonderful community and doing good for the people in the world. Thank you for your support!
Further information can be found at https://www.asure.io
References
- Social security: Issues, challenges and prospects
http://www.ilo.org/public/english/standards/relm/ilc/ilc89/pdf/rep-vi.pdf - Research — European Report on Development (ERD)
https://www.die-gdi.de/erd/ - Health as Human Capital: Theory and Implications A New Management Paradigm
http://www.hcmsgroup.com/wp-content/uploads/2012/05/WP01-HHC-Theory-and-Implications-2012-01-161.pdf - Social Security in Germany
http://international.ruhr-uni-bochum.de/mam/content/intoff/social_security_in_germany.pdf - Pro und Contra https://www.bpb.de/politik/innenpolitik/rentenpolitik/223362/pro-und-contra
Umlageverfahren https://de.wikipedia.org/wiki/Umlageverfahren#Anfangsschuld_/_inh%C3%A4rente_Schuld - Versichertenbericht
https://www.deutsche- rentenversicherung.de/Allgemein/de/Inhalt/6_Wir_ueber_uns/03_fakten_und_zahlen/03_statistiken/02_statistikpublikationen/01_versichertenbericht_2017.pdf?__blob=publicationFile&v=6
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