Chainlink/Etherisc Grant Application: InsureBlox - HappyHoliday

[martin-gocrpyto]

Dear Chainlink/Etherisc team, we proudly present our concept for "HappyHoliday", a parametric travel weather coverage. Please see the pdf document below, it contains 2 graphs, so you have everything in one document if you like. Looking forward to hearing from you! Cheers, Team InsureBlox https://drive.google.com/file/d/1Zm9lrp0V8Uo1pTt6bu_wueqYnhpik9Rz/

Grant Proposal: InsureBlox

Name of Project: HappyHoliday - Holiday weather protection

Proposal Category: prototype

Proposer: https://github.com/InsureBlox

(Optional) Technical Sponsor: Matthias Zimmermann, Christoph Mussenbrock

LICENSE Do you agree to open source all work you do on behalf of this RFP and dual-license under MIT and APACHE2 licenses?: Yes

Project Description

“Why blockchain?” – This is a question that blockchain enthusiasts hear frequently when they present their projects. And indeed, many projects – also in the insurance industry – are not (yet) a perfect fit for the technology, e.g. because the implementation is not really decentralized or advantages of the solution are more than offset by increased IT complexity. 
We all have to be aware that we are still the in early days of blockchain adoption. The technology will advance, as will regulation. 
We from InsureBlox team strongly believe in the potential of blockchain for the insurance sector, especially as it is a perfect solution for some of the major problems that today’s customers have with insurance: lack of transparency, high complexity and, last not least, unreliability, when it matters most: frequently, insurers refuse to pay out for various reasons, and customers are let alone. One example for this is the recent flooding event in the Ahr valley in Germany, where insurance customers face substantial problems to get the compensation they had hoped for.
We at InsureBlox are on a mission to change this: We provide parametric and embedded insurance coverages that are easy to understand and simple to deal with. And they pay out automatically. We explore use cases in different industries, like property, travel, logistics and energy, and we have already developed two prototypes to try out the technology, including also Chainlink oracle services. Going forward, we will also make use of new business models and technologies, including IoT sensor data and pay-per-use models.
Currently, we face a few regulatory limitations which are different by jurisdiction: In Germany, we cannot sell our coverages as “insurance” products as long as they are not backed by a licensed insurance carrier. Therefore, regarding the first products that we will launch, we will stick to low sums insured and offer “protection” products based on a trustworthy software solution (following the regulatory model agreed between Etherisc and BaFin, the German supervisor).
The first coverages that we want to develop (maximum sum insured of 5,000 EUR) are:
•   Holiday weather protection (e.g. in case of sustained bad weather/rainfall during a summer holiday) and comparable coverages for the hospitality industry
•   Basic flooding coverage (to compensate homeowners regarding costs from a minor/ seasonal flooding event) 
•   Hailstorm coverage (e.g. for photovoltaic power plants on rooftops)
The first product we will develop and launch with the help of the Chainlink/Etherisc grant is a holiday weather coverage. This coverage partly compensates holidaymakers if there is bad weather during their holiday, e.g. holidaymakers get 25% of the value of the travel package back, if they face four days of sustained rainfall during a one-week holiday in the Mediterranean. 
We decided for this coverage after intensive research and based on the following reasons:
•   We have carried out substantial market research including comprehensive interviews with 20 potential customers. Bad weather (notably too much rain and lack of sun) is a major issue for the majority of the holidaymakers. There is a clear market potential for this product.
•   The product idea is not new. However, it has not yet accomplished main market adoption. It is still a rather untouched market niche (Sensible Weather from the US is a new start-up active in this segment).
•   The product is easy to understand for customers and promises to have an attractive user experience (also some betting aspects).
•   Apart from holidaymakers as a potential customer group, the coverage can also be included in packages sold to the hospitality industry (hotels, resorts etc.).
•   The workflow and IT implementation is comparatively simple. 

Value

Etherisc’s GIF enables the use of parametric insurance in a fully automated way, which is exactly what InsureBlox is all about. The DIP platform incentivizes insurance product developers to launch products and oracle operators to provide data services, they are compensated with DIP tokens. With our product and also by setting up the oracle (and its aggregation), we will be part of this ecosystem. We will test the functionalities of the GIF, including also the new risk pool / staking mechanism, and maybe spot some bugs or otherwise lead to improvements. Hereby, we support the growth of the ecosystem and the value of the DIP token. 
Our product aims to have a significant impact, reimbursing holidaymakers who have a bad holiday experience due to bad weather. Chainlink is essential in our project, because it generates transparency and trust in the oracle data that we use for claims assessment. The insurance industry seems to be a major target market for Chainlink, this means bringing our product live and selling a substantial number of policies would probably be a good showcase. This would contribute to generating (even) more attraction for Chainlink, the LINK token and increase the overall TVL of Chainlink. 
The main risk lies in the proper implementation of the intelligent contract, which might lead, amongst others, to fraudulent policy applications and therefore the wrongful reimbursement of certain insureds. Our smart contract will depend on Etherisc's risk pool functionalities, so the possibilities of siphoning the smart contract should be limited. Fingers crossed 😉
In addition, we have to make sure that our risk model is solid, i.e. based on a state-of-the-art actuarial model and appropriate data. Probably, we will start with some travel destinations where the weather conditions are generally more stable (e.g. Baltic Sea).
Another major risk is basis risk, which might lead to unsatisfied customers and bad reputation. Basis risk in our case is the risk that the weather conditions which the holidaymaker experiences during his trip are different from the weather conditions measured at the pre-defined weather stations. Therefore, it is important to be transparent about the data used and also to monitor the accuracy of data shown in weather apps.
Regarding the successful execution of the project, the main challenge is that we are a small team at the moment. We plan to integrate new team members through the Chainlink/Etherisc grant in order to have all the necessary skills to develop our solution. Developing and deploying smart contracts has many risks. That's why our team must have a broad set of competencies. We seek at least part-time support from some senior web3 developers and from one more frontend resource.

Deliverables

The objective of the project is to develop and launch all necessary frontend and backend components for the holiday weather coverage based on the Etherisc GIF and an oracle network based on Chainlink. This includes several components: frontend, the smart contract, pricing module, integration with the GIF smart contract modules, and the integration with Chainlink services.
Please have a look at our first high-level draft of the workflow below (subject to changes based on discussions with both Etherisc and Chainlink).

Chart 1: High-level draft of workflow for the proposed parametric insurance coverage (holiday weather protection), without any cash flow processes 

https://drive.google.com/file/d/1ssjJJD8QwquQSD-_0P6KIy03pWNe0deD/view?usp=sharing

We will develop this using the GIF sandbox, and then test and launch it on one of the EVM-compatible blockchains that GIF and Chainlink currently operate on.

Development Roadmap

Please see the table below. It shows the different software components/tasks, technologies used, budget requested and expected delivery dates. 
The dates are based on the assumption that the grant is approved quickly, i.e. early July, otherwise target dates have to be adapted. Please also bear in mind that the risk pool component of the GIF is not yet published and it might require some more time until a solid code base is available. We will keep Chainlink and Etherisc up to date about our progress.

Chart 2: Development roadmap and budget request

https://docs.google.com/spreadsheets/d/1S6W4Lma5wM7E8sINnc0hjtugMdoTDMWp/

Architecture and workflow/processes:
We have already developed a first version of the workflow including the frontend, our smart contract, the GIF modules, Chainlink modules and our pricing backend, see above.
We will discuss our approach with you, ask for advice about the optimal architecture and workflows based on the peculiarities of the GIF framework and the experience with the products that Etherisc has already launched. 
Our results will be published in form of workflow and architecture charts.
IT infrastructure
Based on the business architecture, we will also develop the IT infrastructure. We will discuss our approach with Etherisc and seek external sparring/advice from partners, e.g. Andrei Martchouk and Tobias Latzke from Project Q. 
Our results will be published in form of architecture charts.
Smart contracts
We will build the smart contract based on our knowledge from similar projects in the past, notably from our prototype “Ocean Storm” that we developed during the last Chainlink fall hackathon. 
The smart contract will have standard functionalities required for a parametric insurance product, please have a look at our draft workflow to get an impression about the main elements and how they interact. We have already experience with developing all the necessary functions including the Chainlink technology stack. What is new for us, is the integration into the GIF framework. We have studied it already, and with the help of Etherisc, we will manage to get an integrated smart contract.
For assessing potential payouts, we will retrieve the necessary data via the Chainlink oracle services (Node, Keepers, Adapter, Bridge). We will investigate how we can combine different data sources using the Chainlink data aggregation mechanism. 
 Pricing
Our pricing function will be based on an actuarial model and historical data. Regarding the actuarial model, we are advised by independent pricing experts. The historical weather data will be retrieved from weather APIs. The result of the pricing will be brought on-chain via Chainlink. 
Risk-pool integration 
We plan to use the newly developed risk-pool function of the GIF framework. This part of GIF is still in development / testing stage, so we do not yet know in detail how the integration works. We will discuss this asap with the Etherisc team.  
Front-end
Please see the draft workflow for the major functionalities of the front-end. Core modules are policy application, request of the status of the policy, and notifications regarding the payout. 

Total Budget Requested

Please see the table in the previous section regarding the budget requested.

Maintenance and Upgrade Plans

Our coverage will mainly focus on European destinations at start, we will improve the pricing model to fit more destinations step by step. Due to the regulatory limitations, we will start to sell to customers in Germany. We are eager to explore if and how we can sell to customers in other countries, notably France, in the second step. 
Our first version will receive payments in crypto only. In order to be attractive to a wider audience, and to sell via travel agencies and travel platforms, we will extend the payment options to also accept fiat/credit cards. 
The smart contract must also be able to evolve, thanks to the EIP-1882 (Universal Upgradeable Proxy Standard), we will be able to improve the smart contract to integrate the evolutions of the risk model and to ensure the resilience and gas efficiency.

Team

Team Members

Martin Baier (Germany) Kevin Rougier (France) Thomas Gehrmann (Germany) Malte Anthes (Germany)

Team Member LinkedIn Profiles

https://www.linkedin.com/in/mbpresents https://www.linkedin.com/in/kevin-rougier-472a2ba0/ https://www.linkedin.com/in/thomas-gehrmann-36a05a145/ https://www.linkedin.com/in/malteanthes/

Team Website

https://insureblox.gitbook.io/hackathon/ocean-storm/demo-video
This is the Gitbook site of our recent Chainlink hackathon project “Ocean Storm”, a parametric insurance coverage for vessels and their freight against heavy storms on high seas.
The InsureBlox website is currently under development, the first release will be launched in September.

Relevant Experience

We are a versatile and ambitious team that strives to make an impact for insurance customers, with easy, transparent coverages that pay out in seconds rather than months. Three of us have a background in insurance. Martin has a business background and almost 20 years of experience in insurance (business development, project management including IT transformation and test management). He has been active the blockchain ecosystem since 2017. Kevin is an actuary with 7 years experience (life & non-life reserving, project management for business transformation and automation). In early 2021, he committed himself to becoming a web3 developer and pursues this goal full-time. Malte is an IT developer with 10 years of experience, his first steps in Web3 started in 2017. Thomas holds a Master’s degree in physics and is currently doing a Ph.D. in economics. He started coding in the web3 space a few months ago.
Malte and Martin developed a first prototype of a crop microinsurance coverage together with external partners in 2017, and successfully pitched it at the Blockchain Competition in Zug, Switzerland. 
Kevin, Malte and Martin developed the Ocean Storm prototype (a parametric storm insurance for vessels on high seas) during the Chainlink Hackathon in fall 2021.
Thomas, Kevin and Martin worked on a parametric weather coverage in the Chainlink Hackathon in spring 2022.

Team code repositories

https://github.com/InsureBlox https://github.com/kevinourg https://github.com/s6thgehr https://github.com/malte1989

Additional Information

Please have a look at the demo video of our Ocean Storm parametric insurance coverage developed for the Chainlink Hackathon in fall 2021. We are looking forward to realizing this ambitious project.

https://insureblox.gitbook.io/hackathon/ocean-storm/demo-video