Ethereum-Powered Insurer Nexus Is Winning Over Blockchain Skeptics

Nexus is one of a handful of blockchain startups, at various stages of development, aiming to use the technology for this purpose.

The first insurance product Nexus plans to offer will cover an ultra-modern type of risk: security failures of smart contracts on the ethereum blockchain.

Nexus itself will run as a smart contract on top of ethereum.

Stephen D. Palley, a partner in the Washington, D.C. office of the law firm Anderson Kill with extensive experience in the insurance sector, is something of a blockchain skeptic, yet was uncharacteristically bullish about Karp and Nexus.

More broadly, it's easy to see the appeal of the old-fashioned mutual insurance model that Nexus and a few similar startups want to recreate using today's bleeding-edge tech.

Karpischek's startup has already used ethereum to create parametric insurance products and has explored decentralized risk pools to expand access to insurance.

The common denominator in the case of Nexus and Etherisc is the ethereum blockchain.

Singapore's Zilliqa blockchain will soon be the home of Inmediate, a collaboration between Deloitte, the pan-Asian insurance group FWD and four yet-to-be-named phase one insurance partners.

To get started, Nexus is exploiting an unregulated pocket within the British insurance sector, a model called a "Discretionary mutual," where members have no contractual obligations to pay claims.

Once Nexus is funded it will function as a decentralized autonomous organization sporting a governance process driven by members who will vote on upgrades and proposals over time.