Award Applications

Dear Sir/Madam,

The Insurtech sector has traditionally comprised of startups utilizing technology to bring incremental efficiency gains to insurers.

Our startup will bring substantial efficiency gains to millions, if not in time hundreds of millions, of consumers that are seeking insurance against outliving their retirement savings and we firmly believe that when the Insurtech media starts focusing on such disruptive innovations that this will mobilise the Insurance industry to make more radical adjustments to their business models which will ultimately benefit their shareholders and society as a whole

Because of the unique characteristics of taking a centuries-old insurance concept, re-invigorated on the basis of modern technology such as blockchain, artificial intelligence and biometrics, and addressing a significant social problem in the impending retirements savings crisis, we believe that TontineTrust deserves consideration for the StartUp Insurtech Award.

The Problem at a Macro Level

The 20 largest OECD countries have a combined public pension deficit of $78 Trillion. Many large corporate pension schemes are likewise significantly underfunded.

With over 44% of men and 55% of women now expected to live into their 90s, many consumers will outlive their private savings by 5 years and some by at least 10 years.

Current retirement income products such as life annuities are unpopular due to low returns mostly caused by the high costs charged by Insurers, which act as centralized “guarantors".

Solution

TontineTrust proposes a radically more efficient solution by using our patent pending peer-to-peer tontine pensions administered by an unbiased, mathematically robust smart-actuary which ensures that the pension is ALWAYS fully funded. And because tontine pensions provide lifetime income without requiring a costly guarantee, they significantly reduce the cost of providing pension benefits and thus significantly increase the income paid out to retirees.

Tontines are a 365-year-old financial innovation which successfully financed many European
countries and states as well as numerous private projects such as roads, bridges and hotels. They make periodic payouts shared among their members for as long as they live. In later years, as the number of surviving members declines, the payout per-member rises, often dramatically.

Tontines were first offered in the US in 1868 by insurance companies and they were wildly successful. Over 50% of households invested the modern equivalent of $170Bn before Insurer malpractice caused sales to halt after a 1906 investigation revealing improper uses of capital as well as tampering with the ledger of members which undermined trust in the whole process.

In the century long absence of the highly popular tontines, retirement savings rates have plummeted.

2009 saw the emergence of distributed ledger technologies for immutable financial record-keeping which creates a new form of pseudonymous trust between users based upon math.

As such, consumers can now safely and collectively self-insure the financial risks of living longer by entering into secure, low-cost peer-to-peer tontines.

Our fully regulated peer-to-peer tontine issuing ecosystem which can offer:
• greater financial benefits payouts to the hundreds of millions of global consumers spending ~$350BN per year on retirement income solutions,
• a digital currency which incentivizes IFAs and RIAs to take no-load tontines to their clients, and
• an un-biased, self-correcting, autonomous smart-actuary which can be trusted to ensure the tontine pension is ALWAYS fully funded and always acts in the best interest of the members.

The use of distributed ledger technologies enables TontineTrust members, and the public generally, to audit each Tontine’s progress and future monthly payout projections through publicly exposing;
• the location, composition and live value of underlying assets,
• a record of all contributions from and distributions to each of the pseudonymous
members,
• a record of all fees charged,
• the projected medium and long-term payouts that each member can expect.

It is our belief that such radical transparency is the only true guarantee that there is no double counting of assets, no hidden liabilities and that that all financial products whether institutional or governmental should adhere to this standard to provide the ultimate assurance that they are always-fully-funded for all of the expected payouts.

The Tontine Smart-Contracts are programmed to optimize lifetime payouts to all members with virtually zero insolvency risk, and provide live projections of participants’ expected future monthly payouts for the rest of their life all the way up to their 120th birthday, should they live that long.

The capital in the Tontine is deployed into a diversified portfolio of leading ETF index funds balanced across global markets and asset classes following classical portfolio design theory.

Due to the tontine’s always-fully-funded mandate, its payout will adjust over time in response to actual market returns and mortality experience. In this way, peer-to-peer Tontines remove most of the overhead required of annuity issuers such as capital costs, reserves, and dividends for the shareholders of the insurance company. 

For example, in some markets, an estimated 30% of annuity purchaser’s capital “..evaporates on day one..” meaning that peer-to-peer tontines can potentially deliver a 42% higher starting payout ( 100% / (100% – 30%) = 142%). The story is even better when comparing to the current annuity market environment in the UK, in which the initial $4,598 payout from the tontine exceeds the initial $2,990 payout of the escalating fixed annuity by a whopping 53%!

Project Progress

We are already in talks with several large Asian insurance companies that want to become partners/distributors and in June we have been sponsored by a major global development bank to presenting to several governments as well as representatives of many of the largest and best known gig-economy companies in the world.

The attendees are interested to utilize our platform as a new social security system and/or pension system which provides an always-fully funded-longevity insurance solution without the need for a traditional insurance guarantee.

The award of a prize from such a prominent organization as yours will only help increase attention to this major global problem and the genuinely impactful startups such as ourselves that are actively doing something about it.

For a 2-minute explainer video (>50MB), please check YouTube: https://www.youtube.com/watch?v=lX-viVK6bpw