Insurance companies make a lot of money. I thought about how bitcoin could help to make p2p insurances and this is what I came up with so far:
First of all I guess it makes sense to do insurances in Bitcoin for people that believe in Bitcoin becoming more valuable but likely no insurance would promise to cover $$ damage while holding 100% in Ƀ. Also my goal is to make insurance companies obsolete. First those that have low insurance fraud rates, later others.
Imagine a fire insurance contract like a normal insurance contract. People pay towards this contract on a regular basis after providing a hash of the "filled out registration form" (download the form, fill it out, save it as pdf, maybe zip it with some photos and videos of your nice house, hash it) and an email address.
People can now contact "their insurance" via its (merge-mined) block chain. If my house burns I send a help-message (which costs $500) to this p2p-insurance via its block chain. Based on some randomness (the hash of the block containing the call for help), other 5 members get elected (emails get sorted by hash(block-hash + email address) and may notify to look into the case. Every hour the next in the list may notify until 5 notified to look into the case for $100 of compensations) to respond my call for help. I may provide all the documentation needed, so first of all I will send them my filled out registration form and proof of damage. They also get my e-mail address to ask further questions. They may eventually hire people to do investigations.
Finally these 5 decide on how many Ƀ will go towards me and each of them to cover their work and investigations necessary to verify my claim.
Each party may escalate the case to demand correction (help calls cost $500).
Each "judge" may only get a maximum of $x (percentage of the insured sum) for expenses made.
In any case any future call for help will also provide all the track record of prior cases to the new members involved.
The help call fees (for the judges) and the money decided on for all the parties only gets paid out if 70% of the judges (if more help calls are done, they become more) agree on the final resolution. Payout would work through contracts. In the Bitcoin blockchain a payout from the insurance wallet would occur based on insurance blockchain data (I'm slightly stuck on that part).
I would like to know what you think of this idea and what you think how anonymity and scam-resistance could be provided as I strongly believe this could be a very fair insurance. Typical fraud with fire insurances would be to burn my house after insuring it with several insurances. Our bitcoin insurance would have the problem that I could even run 10 contracts and resolve all ten in parallel as long as there is no central authority matching incidences and there are enough members that an overlap of judges won't occur but I'm sure either other insurances that are easier to identify could work that way or some of you has a good idea to tackle this concern.
