Blockchain Insurance Auction System for Affinity Group Rate Optimization
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Solution Overview
Problem
Consumers face significant time and effort in finding insurance providers that offer the best rates and product features, often requiring recurring research or renewal of existing policies without assurance of optimal pricing or features.
Innovation Solution
A blockchain-based system that groups consumers with similar characteristics and preferences into affinity groups, allowing for auctions among insurance providers to offer tailored policies, automatically updating policies to reflect changing consumer needs and risk scores, and using an intermediary to manage these processes.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If consumers proactively shop for new insurance providers to find better rates and product features, then they may obtain improved insurance offerings, but they must spend considerable time and effort researching and comparing multiple providers
Solution Approach 1:
The system enables automatic policy review and provider selection without consumer intervention. An intermediary entity automatically monitors the consumer's policy, compares it with available alternatives, and executes switching when beneficial, eliminating the need for consumers to manually research and compare providers while ensuring optimal rates are obtained
Solution Approach 2:
The system implements continuous monitoring of policy terms, rates, and consumer needs with automatic feedback loops. The intermediary entity regularly reviews policy performance and market alternatives, using this feedback to automatically trigger policy updates or provider switches when improvements are available, ensuring consumers always have optimal coverage without active participation
2Stability of the object's composition
If consumers renew their current insurance policy, then they maintain continuous coverage, but they may not receive the best available rate or product features
Solution Approach 1:
The system automatically manages policy renewals by continuously monitoring market rates and product features. When a better policy becomes available, the system autonomously initiates the switching process, ensuring consumers receive optimal rates while maintaining uninterrupted coverage through automated transition management
Solution Approach 2:
The intermediary entity proactively identifies and prepares alternative policies before the current policy expires. By pre-negotiating and readying superior alternatives in advance, the system ensures seamless transitions that maintain coverage continuity while securing better rates, eliminating the need for consumers to make last-minute decisions
3Ease of operation
If an intermediary entity automatically manages insurance policy selection and updates, then consumers receive optimized policies without effort, but the system complexity increases
Solution Approach 1:
The patent introduces an intermediary entity that acts as a mediator between consumers and multiple insurance providers. This intermediary consolidates the complexity of monitoring multiple providers, comparing policies, and managing transitions into a single trusted interface, shielding consumers from system complexity while delivering automated optimization services
Solution Approach 2:
The intermediary entity performs multiple functions within a single system: policy monitoring, market analysis, consumer needs assessment, provider comparison, negotiation, and policy transition management. By consolidating these diverse functions into one universal platform, the system manages complexity internally while presenting a simple interface to consumers
Data Source
AI summary
Blockchain techniques for providing insurance to an affinity group may include an enforcement server that receives a plurality of bidding actions (e.g., bid or no-bid) from a plurality of bidding entities in response to an auction of an opportunity to provide insurance for members of the affinity group. The server may compile transactions corresponding to the received bidding actions into a block of transactions (e.g., a round of bidding), distribute the block of transactions to validation entities to form a consensus on the highest bid, and update copies of a distributed ledger with the block of transactions. The server may identify a winning bid and provide affinity group member data to the winning bidding entity, thereby providing consumers with lower cost insurance and/or insurance that is more reflective of actual risk (or lack thereof). The affinity group may be updated over time and re-auctioned using the blockchain techniques.