New Business Models for Insurance Companies within IoT-Payments

“We want to integrate IoT machines into the economic cycle through financial transactions”, says Serkan Katilmis, co-founder and CEO of CashOnLedger. Our partnership with Lindner will aim to achieve a more dynamic pay-per-use rental model by integrating the vehicles into the blockchain network. The automated rental and billing processes can be achieved by utilizing Smart Contracts. The solution also allows for a more precise cashflow forecast since all the transactions between the parties are occurring on a blockchain network, but leaves room for new business models for insurance companies as well.

The role of R+V

Using programmable money just to settle payment claims, won’t add much benefit to the current solution. If we have a look at today’s usage-based invoicing business models, we see automotive companies with car-sharing, press manufacturers as well as turbine manufacturers already using pay-per-use. But the common problem of all is the lack of profitability. So far, pay-per-use models require a variety of administrative processes (money transfers, accounting, etc.) which require multiple resources and raise process costs. Additionally, external services such as insurances from R&V, cannot be integrated as the system and process costs would increase exponentially. But insurances are a fundamental cornerstone of usage-based invoicing business models. Once a customer decides for a pay-per-use model, he demands business case certainty. In fact, if the machine (or vehicle) is damaged or broken, the customer is not willing to pay for the loss of goods and the missing capacity utilization. Hence, contingency insurances will be crucial in order to cover the costs in case of a failure. As current systems won’t allow smart or individual insurances for specific circumstances (more than 200km/h or constantly operating on load limit of the machine), the different risk exposures cannot be measured in order to tailor and optimize R&V’s products, but rather use fleet insurances with a cover calculation.

That case-by-case individual calculation would be possible with a solution such as CashOnLedger’s payment engine as the invoicing and billing processes are based on the actual usage data from the machine, but the system integration between pay-per-use and additional external services still remains difficult. For that very reason, CashOnLedger focuses on a distributed database architecture to ensure compatibility between multiple parties. Using this approach, the dataset which is generated by the machine, can be used for the billing/invoicing and settlement processes on the hand, but can also be used in order to calculate insurance claims against R&V & products on the other hand. This is due to the very reason that the machine data is the single source of truth, distributed between multiple parties at the same time. This transparency in the system creates trust as no central party can alter the data, but all relevant parties have access to the same data. Taking all of the above-mentioned features into consideration, CashOnLedger’s solution does not only settle payments, but proposes an enhancement for the entire system. The payment engine & integration in bank accounts creates process efficiencies through reducing the administrative overwhelm and enables essential third-party service providers to participate in that ecosystem. Therefore, CashOnLedger automates the entire process chain end-to-end, without increasing the complexity of the entire system.