Fida & PAINS - Research and PoC for Decentralized Earthquake Parametric Insurance

[GENERAL] Name and surname of main applicant

Motaz Bukhari

[GENERAL] Are you delivering this project as an individual or as an entity (whether formally incorporated or not)

Entity (Not Incorporated)

[GENERAL] Please specify how many months you expect your project to last (from 2-12 months)

12

[GENERAL] Please indicate if your proposal has been auto-translated into English from another language

No

[GENERAL] Summarize your solution to the problem (200-character limit including spaces)

Catastrophes are borderless, and so is Cardano's outreach.

We'll bridge the gap globally with parametric insurance for the masses built on Cardano to improve the inefficiencies of the insurance market

[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?

Yes

[GENERAL] If YES, please describe what the dependency is and why you believe it is essential for your project’s delivery. If NO, please write “No dependencies.”

Digital identity will be crucial for our insurance project, enabling us to:

1. Prevent Double Claims: Ensure each claim is processed once, avoiding duplicate payouts.
2. Verify Identity: Confirm claims are paid to legitimate individuals, preventing fraudulent submissions.
3. Mitigate Fraud and Moral Risk: Strengthen trust and security by implementing measures that identify and reduce fraudulent behavior and misuse.

[GENERAL] Will your project’s output/s be fully open source?

Yes

[GENERAL] Please provide here more information on the open source status of your project outputs

The only part of the project that will not be open source is the insurance policy pricing and individual employee salaries, which we think will give us an edge as the insurance market grows.

Furthermore, claims, premiums, reserves, and total operational costs will all be shared and open-sourced.

[METADATA] SDG rating

As an SDG-sensitive project, we strive to address all points around sustainable development. We are specifically committed to education (goal 4) regarding online security and social engineering.

We allow online communities to grow and thrive by creating new jobs in our marketplace and service and within the rest of the Cardano ecosystem, thanks to our services' peace of mind and security (goals 8, 9, 10, and 11).

With the security our platform provides, we foster sustainability for the ecosystem participants.

[SOLUTION] Please describe your proposed solution

Platform Overview:

The platform will offer catastrophe insurance against events like hurricanes, earthquakes, floods, and other unforeseen disasters. Coverage will be tailored based on the insured's proximity to the disaster's epicenter, with payouts automatically triggered and calculated using smart contract technology.

Data Verification:

When a disaster occurs, such as the example of unprecedented rainfall in Dubai and Brazil, the FIDA and Pains decentralized application (DApp) will utilize multiple data oracles to verify the event's occurrence and specifics. These oracles will draw on sources like satellite imagery, social media accounts, and news articles to confirm event details and impact.

Insurance Coverage:

Policies will cover various domains, including:

• Travel: Compensation for disrupted travel plans and rerouted flights.
• Motor: Coverage for damage to vehicles.
• Property: Indemnification for property damage and related losses.

Each policy will be verified against the event data and the policyholder's geolocation, ensuring accurate and fair compensation.

Platform Features:

The platform will provide comprehensive support to insured individuals through several key services:

• Indemnification: Automatic verification of the insured's location relative to the disaster's epicenter to initiate claims.
• Loss Verification: Assessment of the reported damage or loss to determine payout amounts.
• Accommodation: Coverage for additional housing expenses incurred due to displacement.
• Food: Reimbursement for unforeseen food expenses when primary resources are unavailable.
• Transport: Assistance with extra transport costs caused by disrupted travel routes or vehicle damage.

Fully Automated:

The platform will ensure 24/7 monitoring of global events to facilitate swift and accurate claim processing and compensation. By leveraging blockchain technology, the system will provide transparent and immutable record-keeping for all transactions, enhancing trust and efficiency.

This refined approach focuses on the technological integration and practical features of your insurance platform, highlighting the benefits of using advanced data verification methods and smart contracts to provide reliable and responsive catastrophe insurance coverage globally.

The below next steps are beyond the current miles stones, but it will give a good idea of our vision and direction.

1.Design and Development (developers)

• Smart Contract Development: Develop and test the smart contracts that will handle the parametric insurance payouts. This involves coding the conditions under which payouts are triggered and the mechanisms for verifying the insured's proximity to disaster epicenters.
• Data Oracles Setup: Integrate multiple reliable data oracles to verify the occurrence and specifics of catastrophic events. This might involve partnerships with satellite imagery companies, weather data providers, and other real-time data sources.
• User Experience (UX) Design: Design an intuitive user interface that caters to a diverse global audience. This includes the dashboard for policy management, claim submission, and status tracking.

2. Predefined Payment Structures (underwriting)

• Develop Parametric Indexes: Create clear and transparent parametric indexes that define the conditions for payouts based on the severity and location of an event. These indexes will automate claim processing and payouts.
• Payment Structure Validation: Validate and test these structures to ensure they are fair and align with typical losses experienced by individuals in various disaster scenarios.

3. Security Audits and Compliance Checks

• Smart Contract Audits: Conduct thorough audits of your smart contracts to ensure they are secure against potential exploits and bugs.

4. Launch and Marketing (Using existing Pains and FIDA platforms)

• Public Launch: Roll out the platform to the public with a clear marketing strategy that highlights the benefits of parametric insurance and the security features of using blockchain and smart contracts.
• Community Building: Engage with potential customers through social media, forums, and other platforms. Consider leveraging influencers within the blockchain and insurance sectors.

5. NFT Integration and Stake Pools

• NFT-Based Identity and Geo-Verification: Develop and implement a system where NFTs are used to verify identities and geolocations of the insured. This could add a layer of security and personalization.
• Stake Pools: Establish and manage stake pools where policyholders can contribute premiums and participate in communal risk sharing.

Parametric FIDA and Pains solution for the masses

[IMPACT] Please define the positive impact your project will have on the wider Cardano community

Impact on the World:

1. Financial Resilience: The project offers individuals and businesses a financial safety net against natural disasters, enabling them to recover more quickly from catastrophic events.
2. Global Accessibility: By leveraging blockchain, we can make insurance available to underserved regions, offering vital protection where traditional insurance is lacking.
3. Transparency and Efficiency: Using parametric insurance and blockchain, the project will automate and streamline claims processing, ensuring prompt payouts and reducing fraud.
4. Climate Risk Awareness: By collecting data on claims and losses, the project will enhance global understanding of climate-related risks, helping communities better prepare for future events.

Impact on the Cardano Network/Ecosystem:

1. Enhanced Adoption: The project will drive the adoption of Cardano by demonstrating real-world use cases for blockchain, attracting more users to the network.
2. Ecosystem Growth: As the insurance project integrates with other decentralized applications, it will expand the Cardano ecosystem, encouraging more projects to build on the platform.
3. Token Utility: The project may introduce a Cardano-based token for insurance transactions, potentially increasing the demand for ADA and related tokens.
4. Innovation and Development: The success of this project will inspire other developers to innovate and create new financial products, furthering Cardano's position as a leading blockchain platform.

[CAPABILITY & FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

Motaz Bukhari (Project lead)

Motaz has 17+ years of experience with an Electrical Engineering degree and a minor in Mathematics from Colorado State University. He started as an Engineer with Saudi Aramco, quickly progressing in 7 years to become the Engineering Supervisor of SAFANIYA plants. He then shifted careers by joining Gulf Re (now Arch Capital Group) as an Underwriter Trainee, advancing in 5 years to the Property and Energy Underwriter role. Later, he moved into reinsurance at WillisRe, focusing on treaty placement, and three years ago, he joined Guy Carpenter, concentrating on product development in the Middle East.

Over the last three years, Motaz has been part of a team that introduced three different Cyber insurance products in the Middle East. These products include two tailored for SME and large enterprise cyber insurance and one designed specifically for retail cyber insurance.

Motaz has a solid understanding of the challenges involved in building a team and developing new products.

Approach to Validate Feasibility

Pilot Study: Pains' project will have a pilot study, and we'll leverage the data they've collected.

Data Collection: By gathering data from a minimum of 2,000 policyholders over a year per pains' project. We will have a robust dataset to understand common risks and further refine our approach to insurable risks for both retail and small business customers.

Pricing Model Testing: We will test our pricing models by analyzing collected data to ensure our premiums align with the expected risk and claims.

Governance Testing: During the pilot phase, we'll assess our insurance company’s internal processes to validate the efficiency and accountability of our governance model and establish a transparent governance structure.

These strategies, combined with our team's extensive experience (Fida insurance) and innovative approach to using blockchain technology, will help ensure that we deliver our project with the highest levels of trust and accountability.

[PROJECT MILESTONES] What are the key milestones you need to achieve in order to complete your project successfully?

Study and Research on Parametric Indexes

Our goal is to explore various parametric indexes that could be utilized for catastrophe insurance, focusing on natural disasters such as earthquakes, hurricanes, floods, and hail.

Example: Earthquakes

Researching earthquakes will likely be the most straightforward due to the public availability of earthquake data. Additionally, the earthquake intensity index is already well-defined, simplifying the process of integrating this data into our parametric insurance model.

Develop Predefined Payment Structures for Parametric Indexes

We aim to research and establish predefined payment structures for different parametric indexes related to catastrophic events. This will involve creating specific policy wordings for each type of event, such as earthquakes, hurricanes, floods, and hail.

Objective:

Simplify the claims process by developing clear, predefined policy terms that dictate the payment amounts based on the severity and impact of each catastrophe, ensuring swift and transparent compensation for affected policyholders.

Design and User Experience Planning

• Develop a series of design boards.
• Create comprehensive user experience workflows and diagrams.
• These resources will detail the web application's expected behavior and interaction flow.

Private Testnet and Feedback Integration

• Launch an incentivized private testnet accessible to industry advisors and key community members.
• The goal is to gather feedback, identify bugs, and make necessary overhauls and improvements to enhance the general user experience.

A report in PDF format with our learned experiences and our plan to create a final retail insurance product and operational.

[RESOURCES] Who is in the project team and what are their roles?

The current team consists of the following members (and growing):

Rodolfo Hansen (Lead Developer)

Rodolfo has cultivated a rich and diversified career, currently linking the technology and insurance sectors. As the founder of Fida - operating since October 2022 - he has melded his technical skills with his interest in blockchain architecture to focus on innovations within the Cardano blockchain, particularly in insurance applications. Preceding his role at Fida, he has been a stalwart presence at Philips since May 2019, where, as a Principal Software Architect in Quality & Excellence, he has spearheaded efforts to enhance software quality and delivery efficiency across the organization.

Lara Bonasorte (Operations Manager)

Lara has excelled in operations management across multiple blockchain and DeFi platforms. At The Ape Society, she implemented a comprehensive support system, providing real-time technical assistance in multiple languages and ensuring seamless community engagement. She played a pivotal role in the successful launch of Levvy Finance, one of Cardano's fastest-growing DeFi platforms. In addition, Lara oversaw the deployment of a CIP-68 asset conversion system, enabling users to customize their NFT metadata in real-time, which significantly enhanced user engagement and platform functionality.

Bob Corn (Emergency Response Team Lead Investigator)

Bobcorn has extensive experience reading blockchain transactions with a unique attention to detail. He has publicly documented countless investigations into scams, alerted communities about DeFi exploits, and exposed malicious actors all through his official X account. Bobcorn is proficient in using Tap Tools, Cardano Scan, and Pool.pm, with expertise across most Cardano dApps and interfaces, making him a highly knowledgeable and reliable figure in the blockchain and DeFi communities.

Shay Henderson (Discord security and Emergency Response Team Member)

Shay has a strong foundation in computer science, specializing in software engineering and knowledge of cybersecurity. He has deep expertise in blockchain technology, particularly Cardano, and is also knowledgeable in Ethereum and Solana. Shay excels in Discord technical management and troubleshooting, bringing significant experience from her active involvement in Web3 communities.

Larissa Morais (Co-Founder of Pains and Marketing Manager)

Larissa has extensive expertise in marketing and graphic design, with a proven track record of crafting compelling visual narratives and impactful brand strategies. She combines her creative skills with deep knowledge and experience in mental health propagation and support, serving as the entire brand face of PAINS. Larissa has effectively raised awareness and fostered a supportive community around mental health initiatives through her marketing acumen and graphic design prowess.

Caleb Montiel (Insurance Moderator and Data Maintainer)

With over four years in the insurance industry, Caleb has developed skills and expertise that align closely with Pains' goals. Caleb has thorough experience in systems management, sales, and leadership and extensive insurance knowledge that will significantly contribute to the team's success.

Matheus Bonasorte (Head of Community)

After founding his marketing agency, Atlas Social Media, almost two years ago, Matheus has excelled in working with companies worldwide in the most diverse blockchains, such as Sui Network, Cardano, and Ethereum. He has gathered diverse Community Management experience after working for Atlas SM, Unbothered Wolves, and most recently, Better Web3, also located within Cardano, offering Publicity Consulting, Direct Marketing, and Social Media Management. Matheus will work alongside Larissa for the Pains brand excellence.

[BUDGET & COSTS] Please provide a cost breakdown of the proposed work and resources

[VALUE FOR MONEY] How does the cost of the project represent value for money for the Cardano ecosystem?

Leveraging Blockchain for Efficiency and Transparency

The project uses Cardano's blockchain technology and aims to introduce a level of transparency and efficiency not commonly found in traditional insurance systems. This includes automating claims processes and payouts, which reduces administrative costs and speeds up service delivery to policyholders.

Global Accessibility and Financial Inclusion

The project targets underserved regions where traditional insurance is not readily available. By making insurance accessible globally, especially in areas prone to natural disasters, the project not only provides financial safety nets to vulnerable populations but also expands the reach and utility of the Cardano network.

Development of New Market Opportunities

By creating a new parametric insurance model on a blockchain platform, the project not only serves an immediate community need but also sets the stage for further financial products and services that can be developed on Cardano, stimulating economic activity and growth within the ecosystem.

Contribution to Sustainable Development Goals (SDGs)

The project aligns with multiple SDGs, including promoting sustainable economic growth (Goal 8) and fostering innovation (Goal 9). By addressing these goals, the project enhances the societal impact of the Cardano ecosystem, contributing to its reputation as a platform that supports sustainable development.

Educational Impact

The project's commitment to education about online security and insurance helps to grow community knowledge and competence in blockchain, potentially leading to increased adoption and development of decentralized applications on Cardano.