Welcome back to MondayMunday, my blog on all things fintech and crypto. Today we have The Intersection, where I chat with fintech/blockchain experts to uncover what they are working on and why they are essential to bridging crypto and the real world.
Intersection /ˌin(t)ərˈsekSH(ə)n/ noun. Where finance and blockchains meet to create endless new possibilities and products to better serve financial systems.
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Now for the post!
Today I am delighted to have Ben Davis from Superscript, a digital insurance broker who recently raised a whopping £45M Series B to build the future of insurance for SMEs.
Ben leads a team at Superscript that looks after insurance products for digital assets. As one of their newest verticals, I wanted to dig into the challenges and opportunities of building in this space.
Ben’s interest in the crypto space?
Ben spent many years in the traditional insurance space underwriting risk and being a traditional broker. After an extended break from work due to illness, he found himself down the crypto rabbit hole to understand the nuances of the technology and its benefits for financial services. After speaking to his manager in the traditional insurance space, he came to the conclusion that he could further the advancement of this technology by finding a way to bridge insurance with protecting digital assets and digital asset businesses. This led to his journey of building out the digital assets team at Superscript.
Approaching talking about crypto in corporate - an educational approach
When initially bridging crypto into traditional finance, it is less so about developing products to insure risk at the start. The first part is often education, these traditional industries need to understand the nuances around the technology and business model implications for their company.
From here, you can then develop products as your industry understand the unique benefits of the technology and the potential disintermediation threat of blockchain technology.
What is Superscript and how being tech-enabled allows them to better serve digital asset businesses?
Superscript has two arms in its business, these are:
A traditional broking arm that uses technology to streamline the process of helping SMEs find insurance for the business.
A services-based arm (SuperscriptQ) which works with technology businesses to understand their unique risks and be the broker for their business.
Ben’s team works solely with Web3 companies from CEX’s to decentralised protocols and apps to provide tailored advice and consulting to help them attain relevant insurance for their business lines.
This is because Crypto comes with unique risks that traditional insurers can often not understand or misprice given their unfamiliarity with the technology. Superscript take the pain away from insurers by being a broker who actively assesses and manages risks on behalf of clients and presents them as viable candidates for insurance. This has two effects:
It makes it easier for insurers to validate the risks of these businesses, with Superscript’s expertise they can simplify the risks and accurately describe and relate them to insurers.
By being highly selective over who they offer their services to, they help maintain relationships with insurers and proactively look to only insure those who have managed the relevant risks, making sure they do not tank this industry with high levels of claims.
What unique risks come from being a crypto business?
Whilst there are a lot of novel risks that are associated with crypto, often these risks are similar to web2 business or can be expressed in the same way.
Naturally, Web3 businesses have to concern themselves with on-chain protection and security threats, but also they contend with the same risks as web2 businesses. Ben outlines many of the broad characteristics of Web2 business such as director experience, simple-to-understand products, being a viable business with a road to profitability and high levels of cyber security in place are often key indicators of sound web3 businesses (as well as web2 ones).
In conclusion, whilst Web3 businesses often have new paradigms to face when counteracting risk, by bringing those web2 standards to their business they can be better placed to manage the risk they face.
Bridging decentralised insurance with centralised insurance
In the decentralised realm, we currently have two approaches to managing risk
Mutuals - Protocols like Nexus Mutual can insure smart contact risk by using a decentralised protocol to pool capital.
Real World Asset (RWA) insurance - The tokenization of Assets on-chain has allowed DeFi protocols to aggregate capital to provide insurance.
Herein lies the opportunity, we currently have traditional finance bringing the benefits of history pricing risk and reputational benefits from their longevity of providing service; from the DeFi side, we have new technology being able to provide structures around aggregation of capital and technology to automate processes. Building a brokerage solution to mix the benefits from both worlds provides a unique service offering to improve insurance for on-chain AND off-chain activity.
Advice to builders?
Ben states his excitement comes from building solutions at the foundational level to improve the customer experience in the decentralised world. We regularly see many copy-and-paste DeFi and crypto products built on different chains and for different niches. However, where the next wave of adoption comes from is from onboarding real users to do this we need products which improves the UX of crypto and adds real use-case-driven benefit to prevent the frauds and scams we see in the space.
Areas of interest?
Following our chat, I asked Ben what his 3 favourite areas of innovation were in the space. Below we take a look at his views on Decentralised ID, Metaverse infrastructure and Gaming NFTs
Decentralised ID
Insurance has a big fraud problem with scammers regularly using fake IDs to make claims in the space. Decentralised ID could be a huge area of growth rearchitecting how users share their identity and how the industry validates them.
Building blocks for decentralised worlds
Ben states companies like Improbable who are building the infrastructure behind the metaverse are super exciting. As we see the growth in individuals valuing their digital real estate and experiences the backbone of these ecosystems is huge.
Figuring out NFTs and gaming
Given this interest in the metaverse, another big aspect is using NFTs in gaming without annoying gamers. NFTs could add some valuable experiences to games such as the digital ownership and tokenization of loot in games, however, this needs to be married with the user experience of this technology.
Thanks for reading if you want to reach Ben, add him on LinkedIn HERE or email him at ben.davis@gosuperscript.com.
If you are a fintech/crypto builder or investor feel free to reach me by replying to this email or DM on Twitter or LinkedIn, I’d love to chat! 🙏
