A decentralized version of Lloyd’s of London insurance market? That’s what Re aims to be, providing open access to an industry that once felt untouchable while guaranteeing a level of transparency and speed that modern stakeholders crave.
Once perceived as a tightly sealed market governed by longstanding conventions, reinsurance is now getting a high-tech makeover through Re’s decentralized protocol. FYI, just like the name suggests, reinsurance is insurance for insurance companies.
What Is Re?
Simply put, Re is a real-world asset (RWA) platform that specializes in tokenized reinsurance. The company is based in the Cayman Islands. Describing itself as a global transaction layer for insurable risks, Re is fully licensed, subject to regulatory oversight, and has already underwritten millions in insurance premium.
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Its founding principle is to remove the secrecy typically associated with reinsurance, utilizing blockchain’s transparency to build trust among capital providers, regulators, and policyholders.
Re provides investors with a seamless way to earn insurance premiums by backing tangible risks across a diverse range of areas, including general liability, professional and umbrella liability, commercial multi-peril, workers’ compensation, personal and commercial auto, inland marine, aviation, embedded insurance, business owners, and homeowners.
As of writing, Re has assessed $13 billion in premiums, written over $83 million in gross premiums, and is currently managing 18 distinct insurance programs.
How Does Re Operate?
Re’s most distinguishing feature lies in its decentralized protocol that coordinates multiple players across the insurance process.
The smart contract protocol makes it possible for participants – ranging from underwriters to auditors – to scrutinize and support various insurance programs while maintaining transparent records on a blockchain.
Leveraging Avalanche for core operations, Re benefits from quick transactions and near-instant settlement finality, which cuts administrative costs and expands access.
Each insurance program undergoes careful underwriting by specialized syndicates, and auditors confirm the economic feasibility before capital is allocated. This method transforms what was once a niche and secretive marketplace into an accessible ecosystem where every stakeholder can see the flow of capital and risk.
With a clear emphasis on security, Re’s approach includes storing private data on an isolated subnet. By merging past practices with the power of blockchain, Re is crafting a more open, fair, and fast-moving reinsurance system.
Who Can Join the Re Protocol?
The Re protocol encompasses four essential participants, each playing a vital role in the ecosystem:
- Coverholders. These include Managing General Agents (MGAs) and insurers who are seeking reinsurance solutions, as well as policyholders who hold insurance policies. Coverholders rely on Re to effectively manage and mitigate their risks, ensuring comprehensive coverage and financial stability.
- Syndicates. Acting as underwriters and/or the initial liquidity providers, syndicates evaluate and support various insurance programs within the protocol and earn USD or USD Coins
- Members. Serving as senior liquidity providers, Members supply the necessary capital to back a diverse range of insurance policies. In return, they earn attractive yields, typically up to 25% APY in USD or USDC, making Re an appealing option for accredited investors seeking returns that are uncorrelated with traditional financial markets.
- Auditors. Responsible for the governance of the protocol, Auditors engage in staking and act as gatekeepers to participation on the network. They validate the economic soundness of insurance programs and ensure that all operations adhere to established standards, earning USD or USDC in return.
Each of these participants contributes to creating a transparent, efficient, and inclusive reinsurance system, leveraging blockchain technology to transform traditional insurance practices.
Do note that all prospective members must undergo a KYC/AML verification process and provide documentation confirming their status as accredited investors to qualify. Auditors, on the other hand, must hold a CPA, an Actuarial Fellowship (FCAS), or an Associate designation (ACAS) to qualify.
Re’s Strategic Backing and Future Growth
Aside from its technology-driven approach, Re’s credibility also hinges on its influential supporters and thorough business strategy. Notable backers include heavyweight insurers, crypto-focused venture capital firms, and global investment companies, like Chainlink, Stratos, Tribe Capital, and Electric Capital.
With an eye on the future, Re expects its decentralized approach to ride the wave of global premium growth, positioning itself as an important player in tomorrow’s insurance landscape.
