ICO Review: Vernam

Vernam is an ETH-based blockchain insurance marketplace.

Boasting a 0 percent commission, Vernam’s goal is to use blockchain to:

1. Provide a transparent, competitive marketplace for insurance products.
2. Give 30 percent back to the consumer by removing fees
3. Implement what they call a “CryptoSafe” smart contract, guaranteeing when an event occurs, the client will be compensated with Vernam Tokens (VRN).

As insurance is an industry with astronomically rising costs, it’s no wonder that companies like Vernam are looking towards blockchain as a solution to bring down the price. Because although this is a huge industry, it’s also one that with a real blockchain-product people can use in every state, could see massive adoption.

Looking to raise a hard cap of $42.5 million, Vernam’s marketplace might be just a viable solution for the insurance industry. Here’s what we think of their whitepaper:

The Basics

Vernam’s goal is to take advantage of decentralized ledgers and to address inefficiencies in the current marketplace. They view to take on two main problems, including a lack of pricing transparency, as well as a lack of adequate customer history. Furthermore, their eventual goal is to create a marketplace for consumers to purchase insurance policies either in fiat or VRN.

A big goal of Vernam’s model is to cut out the intermediaries that drive up insurance costs, such as brokers.

Problems In Insurance

A concern of Vernam’s is how there’s little to no standardization of information and procedures for customer awareness. Furthermore, this is an industry they view as lacking in innovation, with a lackluster distribution model (especially with what could potentially be done online). And when you add in that most brokers charge 15-20 percent, there’s an increased cost without any particular value-added.

Another significant point Vernam makes is how a lack of transparency in what goes into a premium means that it’s ultimately up to the broker’s discretion how much they disclose.

How They View The Blockchain Helping

The Structure

Vernam feels that blockchain will help establish a balance driven by shared data and mutual trust. As data is stored on a re-distributed ledger, it’s free from a central authority, which means that clients can be sure that their data will not be used or tampered with. Furthermore, a users’ identity and transaction history can be managed as well, providing transparency on the customer end as well for insurance companies to conduct items like risk assessment. Overall, the goal here is to reduce premiums by reducing risk.

Safety

Of course, blockchain’s decentralized nature means that there’s no central server with sensitive information, which is important for the industry. Their platform will also have a “public and “private” section, where the public will hold insurance-related details, while private will allow clients to purchase crypto digital and insurance products. The hope is that Vernam creates a mix between digitalization, security, optimization of processes (including customer care, data protection, and business/social purity). Designed to be an online system that’s self-reliant in creating its own rules, Vernam aims to reduce a lot of the risk by lacking entry points of penetration.

Incentives

Vernam looks to provide an incentives program for buying insurance products with their VRN token. They aim to do this through their digital exchange, hoping to offer discounts to those that use the VRN token. As Vernam gains traction, the recognition and acceptance of crypto will result in the broader circulation of the VRN Token.

Other incentives Vernam looks to offer is for people to compete on brokerage, as well as soliciting insurance products to create a reverse bidding process.

Cryptosafe

Cryptosafe is a product Vernam is looking to produce that will be available to purchase with VRN tokens. This will use smart contracts to define when a set of events occurs; the client will be compensated with a certain amount of VRN tokens. Vernam is developing this with global claim management company Insuralis Germany.

Registries

A significant hurdle Vernam has to address to scale is how they’re going to register different insurance companies and registries.

Worldwide Insurance Smart Contract Registries Registry

This is the “master” smart contract that will be the linking point between different nationwide registries. It will hold the list of all available registries for the different countries.

National Registry Smart Contract Group

This will be a system of smart contract obliging to each country, including using what they call the:

Factory Smart Contract which creates smart insurance contracts for the given country.

Registry Smart Contract which is the registry of all insurance smart contracts issued for the nation.

VRN Token Handling Smart Contracts which is the sub-system in charge of the VRN Token Pool.

VRN Token Pool which are for commissions

VRN Token Pool Handlers Whitelist which is the whitelisted nation registries that can operate within the token pool.

Our Thoughts

On the surface, Vernam is looking to take on a pretty massive market, which is going to come up with some significant hurdles. Although their whitepaper is impressive and it seems like they have a good idea on where they want to go, one thing that needs to be addressed is how they plan to onboard insurance companies and the larger incentive for them. Furthermore, as a heavily regulated industry across the globe, onboarding themselves in all of these areas and developing smart contracts for each will be a lot of work. However, despite these limitations, if Vernam can come out the gate and provide value to both sides of the market from day one, then they have a pretty good chance of being a substantial investment.