FAQs about Black Insurance Business Model
By: Triinu Murumäe
Tags: Insurtech, Token Sale, Crowdfunding, Blockchain, Insurance

We have prepared FAQs and answers regarding Black Insurance business model. This post is addressing the questions from our community as well as from investors and various stakeholders. In addition to this post, we always advise reading our Whitepaper as well as the Technical Whitepaper by Dr Alex Norta.

What is syndicate? Can anyone join in as the syndicate?

The Black Platform will allow Investors to join together into an investment fund called a Syndicate. Syndicates are the people who manage the funds on behalf of investors, they are usually professional insurance fund managers.

But an investor can still the crowdfunding process to pool the money with other investors, which will be managed by the syndicates.

Are the syndicates going to replace insurers?

That is right, the syndicates will manage the funds collected through the crowdfunding and decide on which investment they will make.

On Black Insurance platform, the syndicates will provide capital to the brokers, insurers, and reinsurers are no longer needed, thanks to blockchain technology! Insurers, as we know them today, are simply a trusted third party — blockchain gives us an alternative to that and the need for insurers disappears.

How about the insurance brokers?

The brokers will be able to design and sell insurance products via Black Insurance platform. The insurance products will be cheaper and specially tailored to the customer needs

Can broker sell insurance without the insurance company?

Sure, a broker works independently, meaning they can offer you a host of insurance products and services.

Do you share the profit made by your brokers?

Here are 3 main stakeholders:

1) BROKERS who design and sell the product,

2) INVESTORS,

3) SYNDICATES who manage the funds on behalf of said investors.

All said parties share profits. Usually, fund managers (syndicates in our game) take also a small fixed management fee, and brokers usually want to have a commission. So what’s left after commissions and management fee, is profit but there incentives and bonuses can be adjusted on a syndicate basis. Some syndicates might want to work in the way that brokers don’t get the commission and instead share profits instead — this would motivate them to bring in more profitable business.

Also, some syndicates might want to give up the management fee and ask for a higher profit share instead.

The revenue model of black itself is simple — we charge a ~3% commission on the revenues. Considering that the part of the value chain that black covers currently takes up easily as much as 10–20% of revenues, the participants will hopefully find that 3% is more than fair.

Is it possible to work without insurance companies?

Absolutely, through crowdfunding, everyone can participate in syndicate tokensale by purchasing BST security token, the syndicates can then fund the insurance brokers. The brokers are responsible for setting up their insurance agencies and sell insurance products.

Is Black Insurance the syndicates?

Black Insurance is not the syndicates, we are a platform to facilitate the processes for stakeholders. Crowdfunding: everyone can participate in syndicate tokensale by purchasing BST security token, the syndicates can then fund the insurance brokers, finally the users will be able to purchase insurance products that are cheaper and specially tailored to their needs from the brokers.

Are you selling existing insurance or just new insurance types?

The Black platform is product agnostic — users can create any type of product, both personal and commercial lines (life, health, motor, travel, liability, cyber etc). It’s up to Syndicates to select which products they invest in, and to Investors to decide which Syndicate they fund in ICO-s.

The public money will be used to fund the brokers?

Exactly, by purchase BST security token, investor money will be managed by the Syndicate, who are usually professional insurance fund managers. The Syndicate will provide funding to the brokers

Will the public earn a return or are you just an utility token for capital gain?

Black Insurance will use two types of tokens:

Black Platform Token (BLCK). All platform users will use BLCK for managing insurance on the Black platform. Issuing policies, handling claims and other transactions will require the use of Black tokens (BLCK). The demand for BLCK will increase as more insurance business is conducted on the platform. BLCK tokens will be available for sale during our ICO.

Black Syndicate Tokens (BST) (issued when the platform is ready). BST is an investment in insurance capital, and a specific BST is created for each syndicate (security token), The profitability of the insurance portfolio for a specific syndicate will pass-through to the holders of its BST.

Do you have a way to check if the products being offered by the brokers are good for the insurance buyers?

We will make sure that with each Broker we are using at least 3 of the following methods to be confident that the Broker will bring profitable business to Black.

1.Sound business plan. Black will ask Brokers to present their business plan. Black’s specialists will analyze the plan and consult with specialists in the local market if necessary.

2. Skin in the game. In order to align the interests of Brokers and Black, the Broker has to have their skin in the game. The Broker must pay a deposit of 5–25% of planned Gross Written Premiums to Black that will be used to cover the losses in case the business is unprofitable. In case the loss of the insurance portfolio exceeds 2x the deposit then the Broker is required to fill in the deposit or he cannot write new business anymore.

3. Black’s own underwriting know how. Over time Black will gather large quantities of data from different markets, and by analyzing it with machine learning and AI, Black is able to calculate the prices at which any insurance business can be profitable. We will implement smart contracts that accept insurance policies from Brokers only in case insurance premium is at least on the level that does not create the loss to Black.

4. Community references. We require the Broker to have at least two positive references from the market where he operates. The references have to prove that the Broker is able to underwrite a profitable book of insurance business.

Didn’t see an answer to your question? Send an email to info@black.insure and we will get back to you as soon as possible.

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