Last week blockchain startup Infineo announced it had tokenized $125 million in life insurance policies in just over three months since launch. These are not new policies. They are policies that the insured has uploaded to its platform to tokenize. The current purpose is to ensure the beneficiaries are notified if the policy holder dies. However, Infineo also plans to create a secondary marketplace for policies and support lending using insurance policies as collateral.
When someone dies, the beneficiaries aren’t always aware they were included in the policy. In the past there have been issues with life insurers not making sufficient effort to contact beneficiaries. A USA Today report in 2016 alleged that insurers used the Social Security Death Master File to stop payments to annuity owners. However, they allegedly were not using the same data to notify life insurance beneficiaries. The same year, major life insurance companies agreed to pay $7.4 billion in unclaimed benefits to the Florida Office of Insurance Regulation. Two thirds of the sum was passed to beneficiaries and the rest as unclaimed property in various states.
With Infineo, policy holders upload their insurance cover document and then add contact details of beneficiaries. A hash or fingerprint of the policy is logged on the public Provenance blockchain. However, personal information is held in an external encrypted database. The data isn’t currently linked to the insurers, so any policy changes still involve contacting the insurer.
“The minting of $100 million worth of life insurance policies on Provenance Blockchain is not just a technological breakthrough but a testament to our commitment to democratizing access to one of the most stable financial instruments,” said Cole Snell, founder and CEO of infineo. “This achievement underscores life insurance as a leading use case for real-world asset tokenization, driving both innovation and growth across the industry.”
Regarding the business model, the death notification service is currently free. Infineo plans to make money on the secondary market and lending.
RiskStream explored the Mortality Monitor use case
This beneficiary notification concept has been trialed before by the Institutes RiskStream Collaborative using blockchain. However, it funds the technology development through contributions by the carrier members. Hence, it appears there wasn’t sufficient appetite for the solution.
There’s more logic for insurers to use blockchain because they are the primary record holders for beneficiaries. That’s something where it’s good to have a public record of when changes are made. For the Infineo solution, arguably there’s less need for blockchain with the current use case, given Infineo is not the primary record holder. A conventional database probably works fine. However, for the secondary market and lending protocol, that is a different matter. Undoubtedly, there will be some interfacing with insurers to make sure the uploaded policies are legitimate before launching the secondary market.
