In a difficult reinsurance market, Re launched this year offering a blockchain-based technology to cover a wide range of risks with reinsurance.
The startup insurtech, led by CEO and co-founder Karn Saroya, began development in 2020 at Cover, a car and home insurance insurtech he had co-founded in 2016. Re has written about $35 million in coverage so far and expects to reach $150 million by year-end.
Re uses Avalanche, a smart contracts blockchain platform, as a protocol to handle accounting, applying it to underwriting decisions, explained Saroya. With it, Re users can operate like "reinsurance MGAs," he said.
Re covers risks including workers compensation, directors and officers, errors and omissions, as well as industries such as agriculture and aviation. Its technology "memorializes" data in Avalanche to use for underwriting and pricing decisions, according to Saroya. With Re's platform, an underwriter can "assess the business and put up their hand, like a syndicate at Lloyd's, supply capital to that deal, and have the protocol come in behind it to supply the rest of the capital that's necessary to back a deal," he said.
Capital devoted to covering a risk is held in trust accounts, but these have a continuous real-time audit. "They know exactly what risk we're on at a given point in time," Saroya said. "We give access to auditors to read our bank accounts in real time."
The reinsurance market has had challenges including rising premiums and tightening margins, but those "dislocations" have created a rare opportunity for Re, Saroya said. Being a "new entrant without a legacy of losses" meant that Re could more easily step in and sell its coverage.
Another selling point for Re is the security that blockchain technology affords in keeping permanent records, according to Saroya. "If you misrepresent performance for a third-party administrator, that lives on in the chain," he said. "If you're a bad actor as a fronting carrier, and you over-collateralize or you do a variety of things that fronting carriers can do to be kind of shady, that is on the chain. It forces an incredible amount of transparency that's going to be attractive to folks who are high performers that ultimately want the benefit of better economics."
This in turn helps insureds satisfy regulators and pass scrutiny, by providing full disclosure. "It is to their benefit," Saroya said. "They now have the ability to query any given deal and have the ability -- in a nice, neat interface that's been produced for them – to query what capital reserves are in place in the performance over time."
