Bright Union focus on bringing institutional capital into decentralized insurance

Bright Union
7 min readSep 29, 2022

and we have been accepted into a top accelerator program

At Bright Union our purpose is to secure the Web3 economy. Every Web3 user, however big or small, modest or grand, should be able to safely navigate the Web3 economy with the hope of securing its financial future. Hacks, exploits, rug pulls and stablecoin depegging events still happen all too regularly. Not only costing the crypto community billions in dollars a year but also harming consumer confidence in the Web3 economy. For the Web3 economy to grow to its full potential, all users should be able to safely navigate the Web3 economy. Decentralized insurance will be one of the key pillars in securing the Web3 economy.

The biggest challenge facing decentralized insurance currently is the lack of available liquidity. Consequently, Bright Union has decided that this is the problem that needs our attention; to prudently accelerate decentralised insurance liquidity. Initially, we believed that liquidity could be sourced from within the industry, and that our tool, the Bright Risk Index, would be the most sophisticated and diversified insurance liquidity product for that.

However, Bright Union needs to remain agile when reacting to trends and market developments that impact decentralized insurance and the broader DeFi space. Since the decrease in DeFi activity and the lowered user confidence in DeFi, Bright Union believes that the best way to solve the liquidity problem with prudence is to onboard traditional insurance capital into the space. It is mutually beneficial as there are many reasons why these players want to invest in the space. It is worth noting that the Bright Risk Index, and other products which we have worked hard to build and launch are not going anywhere! On this note, the new token value flow is also on hold temporarily until the market recovers.

Hence, we have shifted our strategic focus onto bridging the Web2 and Web3 insurance worlds. We are proud to announce that we have been accepted into a top accelerator programme, NXT:Customer, run by InsurTech Hub Munich. The partnership network includes the leading provider of reinsurance, primary insurance and insurance-related risk solutions, Munich Re, among others like Allianz and Lloyds. This accelerator marks the first big leap for Bright Union in achieving this goal.

The benefits for the Web3 space of bridging traditional insurance into decentralized insurance are numerous and evident. But what drives traditional insurance to take their first steps in DeFi? Let’s dive a bit deeper.

Cynthia and Kiril at the NXT:Customer program

What do traditional institutions want to do with DeFi?

There are multiple reasons why traditional (re)insurance companies are interested in decentralized insurance. One of the most simple reasons is diversification of their customer base. With a consolidation in the insurance industry leading to bigger balance sheets of insurance companies, they can keep more standard risks on their balance sheets and have less need to reinsure them. This makes reinsurance companies look out for new markets and new customers. (Re)insurers also want to diversify their risk portfolio as they get less standard risks and more special risks on their balance sheet. Where specific branches such as cybersecurity cannot be more than an X percent of the total portfolio, Reinsurance companies are also looking for investors to offload some of these special risks of their books.

Secondly, for reinsurers, access to on-chain data is invaluable for their risk management practices. Typically, detailed risk data is kept proprietary by the different players in the insurance value chain. Only the bare minimum in data is shared with the other players in the value chain. Therefore, often reinsurance companies only get limited customer specific data on the risks they are covering; they take on a pre-packaged bundle with a nominal risk type or value. By interacting with the blockchain, these organisations suddenly have access to this wealth of data stored on-chain.

Finally, these organisations are able to participate in the next frontier of finance with hand-holding from crypto-natives who also have a deep understanding of how traditional insurance operates.

Bridging decentralized insurance to traditional insurance

With these factors in mind, there is a big incentive for Bright Union to tap into this institutional market. By teaming up with traditional (re)insurance companies, Bright Union can create a win-win scenario for all parties. These TradFi companies gain unique insight from a crypto-native company and gain access to bespoke decentralized insurance products. In return Bright Union gains, first and foremost, liquidity for underwriting risks within DeFi. Secondly, we would have access to advisors and tools with risk management capabilities which can be used for calculations around pricing risks. And finally, Bright Union would gain credibility and trust from retail investors, users, other institutions and beyond.

Already, we have been in discussions with multiple traditional insurance companies, who are eager to partner up and our acceptance into the NXT: INsurTech accelerator is one more entry-point for breaking into this market to learn about these potential clients’ perspectives and needs.

With these partnerships and the Bright Teams’s strong background in DeFi and traditional insurance, we would trigger a new wave of decentralized insurance products which would greatly boost the available liquidity for decentralized insurance purposes advancing the market into the next phase.

Cynthia and Kiril at the NXT:Customer program

NXT:Customer Program

The NXT:Customer accelerator is a 10 week programme with both in-person and online networking and teaching. The programme will ‘dive deep into the world of the nxt:customer and the megatrends they are surrounded by’. Run by InsurTech hub Munich, the programme commences on the 27th September in conjunction with DIA Munich 2022- top InsurTech conference.

Through the InsurTech Hub network, Bright Union is planning on securing high-quality and long-term partnerships with these institutions described above. With all the knowledge gathered from the programme, we plan on designing a new service offering for traditional insurers to get into DeFI.

Read more about the accelerator programme here

Current state of DeFi insurance

The current state of the market is no secret — TVL is sitting at $56bn compared to $136bn a year ago. Since the UST de-peg event activity across the board is down, including in insurance. Nexus Mutual and InsurAce’s active cover figures are both a fraction of what they were at their peaks.

Given the current state of the market we are prioritising this new strategy with traditional insurance and the NXT program. It would be a futile use of resources to implement the tokenomics v2, despite all the effort that went into designing the value flow. We are closely monitoring the state of the market to ensure that we have the update tokenomics live when we see signs of market recovery. Current operations of Bright Union will continue as per usual. Anyone wishing to compare, buy and manage their covers can still do so through the app.

All future token distributions for the team and advisors have been halted until further notice to decrease anymore sell pressure on the token at the moment. At the appropriate time, the distribution will resume likely with new vesting periods and conditions.

Bright Union will keep pushing forward with achieving our goal of securing the web3 economy. We will keep using innovation as our flywheel while leveraging the capabilities of the traditional insurance space to create additional momentum. We will keep you updated on our progress and we expect to share more concrete and exciting news soon.

The Future is Bright

About Bright Union

Bright Union is the world-leading multi-chain decentralized finance cover marketplace. A platform to aggregate and match supply and demand, it also accelerates the industry by providing strongly needed insurance liquidity.

By aggregating & accelerating the entire web3.0 insurance landscape, Bright Union is uniquely placed to offer easy integration to any dApp, wallet, exchange or metaverse and provide their investors an extra layer of trust by offering the best insurance policies on point of need.

Is there a risk platform that you think we should integrate with? Let us know!

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Bright Union

DeFi Insurance marketplace that allows DeFi users to to buy and provide coverage against hacks and protocol failures.