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The First-Ever Bitcoin-Denominated Life Insurer Embraces AI

The First-Ever Bitcoin-Denominated Life Insurer Embraces AI

First Ever Bitcoin-Denominated Life Insurer Embraces AI

Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

After last month’s testimony before Congress on AI issues, the CEO of OpenAI, Sam Altman, has backed a new project. Altman co-led two seed rounds raising $19 million for Meanwhile, the first BTC-denominated life insurer.

The other funding lead was Lachy Groom, former head of Stripe Issuing, which allows businesses to create and manage commercial card programs. Together with Gradient Ventures from Google and angel investors Parker Conrad, Dylan Field, and others, Meanwhile has ensured sufficient funding to become a fully licensed and regulated life insurance company by the Bermuda Monetary Authority.

What is Meanwhile Going to Do With AI?

Thanks to the latest funding round, Meanwhile is the world’s only life insurer that denominates policies in Bitcoin. Zac Townsend, CEO of Meanwhile, picked Bitcoin in this role for its potential to “become a global store of value and functional currency.” 

Since Bitcoin is a fully automated and decentralized asset, Townsend sees AI integration as natural. Life insurance is one of the most popular and oldest products, with three in four Americans having at least some form. Globally, the market for whole life insurance is expected to grow from $170.72 billion in 2022 to $175.67 billion in 2023, according to Research and Markets.

At such a long-term trajectory, Bitcoin seems to be an obvious choice as a hedge against currency debasement within a debt-based monetary model. But what Bitcoin brings as sound money, AI brings as Meanwhile’s end-to-end insurance rail that facilitates insurance claims underwriting, as AI-boosted evaluation if the policy covers a claim.

Meanwhile’s CTO, Max Gasner, hopes that the BTC-AI combo will upgrade life insurance to a new level of transparency while also reducing manual labor and time-consuming review process. 

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InsureTech Is Historically Difficult to Establish

Unlike FinTech, which even Goldman Sachs and BNP Paribas embraced in the form of Canton Network, the insurance sector is notoriously resilient to InsureTech innovations. Gallagher Re data shows that $40 billion has been invested in InsureTech startups over the last five years.

Yet, the insurance landscape hardly budged, as demonstrated by the prominent InsureTech startup Lemonade which is still losing cash. According to Paul De’Ath of Oxbow Partners consultancy, insurance is peculiar in that customers “care less about the features” but more about the price of policies.

One of Meanwhile’s backers, MS&AD Insurance Group, acknowledges that getting Meanwhile to “reach over a billion people globally,” according to CEO Townsend, is a tall order. 

“The insurance sector is often regarded as inefficient and adverse to new technologies, and frankly, that is true in many cases,”

Jon Soberg, Managing Partner of MS&AD Ventures

Meanwhile will aim to flip this cart by combining blockchain with AI to create a dynamic insurance program. One of the features includes passing generational wealth by locking in today’s tax basis (at the time of policy agreement). Meanwhile will also offer guaranteed death benefits and surrender value for optimal long-term planning.

The BTC-denominated private credit fund is also in the works, alongside BTC-denominated term life insurance and accidental death coverage. Users could also tap into their insurance policy liquidy to issue low-interest loans or partially withdraw BTC.

AI Integration Not New, but BTC May Be Enough to Push InsureTech?

If Bitcoin grows in value as expected, especially after the next halving in April, making a part of the life insurance policy active could be a big draw. Meanwhile is the only life insurer that will launch such products as people join the waitlist.  

However, AI integration is not that novel. The aforementioned US-listed Lemonade (LMND) startup also launched AI-powered insurance underwriting. Lemonade’s AI-Jim paid a theft claim back in 2016. However, the company hasn’t turned out as profitable as expected.

As of the latest May earnings report, Lemonade is still running down its cash reserves, dropping from $286.5 million in December ‘22 to $254.8 million. Meanwhile, no pun intended, Lemonade’s total liabilities are still running high at $819.4 million. With that said, Lemonade’s revenue has gone up from $44.3 million in Q1 ‘22 to $95.2 million in Q1 ‘23, with a continuing downward gross loss ratio.

This suggests that Lemonade is becoming more efficient at AI managing risk and reducing the severity/frequency of losses. With a new generation of AI, Lemonade’s lessons in hand, and BTC as a currency debasement hedge, Meanwhile could become the InsureTech startup that goes against the grain. 

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Would betting on Bitcoin to grow big make Meanwhile equally big? Let us know in the comments below.

The post The First-Ever Bitcoin-Denominated Life Insurer Embraces AI appeared first on Tokenist.

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