Here is the paper that I wrote:https://www.dropbox.com/s/tu7bsdati64d0h2/Peer to Peer Insurance white paper.pdf?dl=0
This is why I wrote the paper. Its long but I feel it is relevant.
I wrote this paper to help the Ethereum community make the case that peer to peer insurance on an Ethereum blockchain is something new and worthy of consideration for insurance licensing and regulatory exceptions. This is because I personally want to launch an insurance DAO but I face a challenge in that I have extremely limited finances, connections, legal expertise or human capital to overcome the costs and barriers of regulatory overhead. The Ethereum platform gives me hope that a minor player like myself *might* have the opportunity to make a meaningful contribution first to the Ethereum community and eventually to the world.
I am passionate about helping others innovate by creating new insurance products and services within the sphere of this new technology. I feel that responsible developers have a mandate to both protect the consumer and prove to the community that the smart contracts they publish take the greatest care to remove any opportunity for any kind of fraud to occur. We want to end an era of people telling us to trust them because they are "good guys" or because of brand or even reputation. My desire is to gain the privilege of working hard to produce contract code that speaks for itself. If I could write code that would deliver a message to potential consumers it would be "I don't know if my developers are morally good or bad but you don't have to trust them because my code is autonomous and regardless of their ethical standards it is technologically impossible for them to defraud you. Read my code, hopefully you can understand it and if it is without flaws and I offer a meaningful service delivered in a fiscally responsible way I would like to serve you."
In a perfect world it would be great to innovate without breaking the law. It takes effort to write socially responsible smart contract code and the type of people who can create DAOs which protect people from fraud usually are the types of people who would prefer to cooperate with authorities if possible. To produce and sell a useful product for a responsible profit is a noble goal. But regulatory overhead for insurance products greatly limits the ability to innovate in this space legally. Our current set of laws govern human institutions with limited success and for all their shortcomings they are the best society has been able to do up to this point. But the great promise of Ethereum and the reason why we care about this technology is because we can do better than human insurance institutions. We can create a fundamentally different type of corporate policy with the help of the DAO. At the end of the day there simply is not infinite resources. Where would society prefer that I spend my development resources on? I could pay nearly 5 million dollars to gain regulatory permissions to issue insurance in 50 states in the US alone or I could use that 5 million to write the most solid, tested and responsible smart contract code possible. The difference is that the regulations can't guarantee you won't be defrauded and inviolable smart contract code will.
So if I only have 150K that would allow me to bring a product to market this means I can spend 100K on licensing for one state and create limited austere code for 50K. Or if I only have 100K it means I can potentially do nothing. I believe there will be a transitional period where people who have dreams but limited resources will do their best to write good code and operate as much as they can in a regulatory grey zone. Once informed that they have broken the law perhaps they have bought themselves enough time to raise additional capital, perhaps not. In the latter case they should responsibly quit (and refund all participants their money). But to not even make an attempt to participate in this new financial platform due to lack of capital resources required to meet standards which apply to human institutions doesn't make sense to me.
Given the vast number of bitcoin services which have been compromised, how many people that have been intentionally or unintentionally defrauded and given how many well intentioned people have unintentionally become criminals perhaps I am wrong to have the attitude that I do. Even with a decentralized service buggy code can still lead to financial losses for consumers. But paying the government money to provide a DAO an insurance license doesn't seem to make things much better. What would be great is if you could take the money you would have paid the government (who knows how to regulate human institutions) and paid it to blockchain smart contract experts who can find shortcomings in your code instead. This is because DAOs don't employ any full-time staff which seems to suggest that regulations which apply to human institutions may not help much to regulate the DAO (duh).
Obviously I am passionate about this technology as I hope many other people are. I would very much like to begin a discussion with you the Ethereum community about the possible benefits, challenges, and difficulties surrounding the future of the insurance DAO. If this paper accomplishes anything it would be that many more people would be inspired to make the same case from different perspectives. Can we make the case to the world that these new financial instruments require a revolutionary new type of financial regulation? My fellow Etherians and Daoists for our vision and for future generations we must, we can DAO it!
Whew you made it thorough a loooong post. Sorry hope it was time well spent.