In a perfect world, all markets would reach equilibrium, but of course, the world’s not perfect.

In real markets, many factors create frictions that restrain the market from reaching equilibrium. Information asymmetry is an extremely common barrier; it’s a phenomenon that occurs when a transaction or interaction is made between two parties even though one of them has a greater degree of information regarding the true value of the transaction or interaction. Due to information asymmetry, many markets aren’t able to work properly and the insurance industry serves as a prime example.

Car insurance is a multi-trillion dollar industry and yet it still faces critical inefficiencies due to information asymmetry. A consumer truly knows whether or not he or she is a diligent driver, however, the insurance company has limited means of verifying the personality of a driver. Insurance companies tend to estimate the expected cost of any insurance policy by estimating the likelihood of a person committing an accident and the expected cost of that accident. While it is possible to estimate the cost of most accidents, it’s nearly impossible to accurately predict which individual is more likely to commit an accident until the person builds a record of continuous accidents, but by that point it’s already too late. An additional problem occurs if the person migrates as then he or she does not have a record in the new country; those who had performed poorly and those who had performed well are reset to the same level of cost.

Blockchain projects are utilizing the transparent nature of blockchain technology to fight information asymmetry in various sectors. Now, Essentia offers a feasible solution to the inefficiencies in the car insurance market.

The Essentia Benefit

Essentia allows users to develop a seed which happens to be a set of a person’s data. Essentia integrates various platforms, services, and exchanges onto one platform, thereby allowing people to have a convenient means to interact with and manage their digital identity. The user is the only one with the deciding power of who can access which aspects of the data carried by a seed. This development can make it incredibly easy to predict which person is less or more likely to commit an accident.

• Insurance companies that need to issue insurance policies to fresh immigrants can request access to the seed and see which individuals had bad history in their previous country. Users won’t mind to share the information as they control what the insurance company can see and for how long they can see it. The insurance firms get a temporary access to the data.
  To ensure that people opt into offering data from the seed, insurance companies can offer lower policy premiums to those with a positive record. Considering everyone wants to save money and since Essentia ensures no data is owned by the company, the only ones not agreeing to provide data from their seed are most likely most likely the ones who would face a higher priced premium.

• The situation has always been complicated as actuarial scientists attempt to price an insurance policy. But a comparison of net expected revenues and net expected liability costs to eventually charge an average rate for the whole market is an improper approach to pricing insurance policies.
  Essentia, however, offers a solution. Since the platform allows users to completely manage their digital presence from a single location, it offers the user the opportunity to offer the insurance company a complete snapshot of their behavior. By temporarily accessing user data and IDs to understand how reckless a user is on social media, on exchanges and with respect to their savings, and in their general digital presence, companies will be able to accurately predict which drivers are likely going to act recklessly on the road.

Essentia paves the way to remove information asymmetry in one of the largest industries in the world. It provides an effective means to differentiate bad apples from the good ones and will properly reward those who drive well and will justly (financially) penalize those who drive recklessly. Good drivers will no longer have to subsidize the cost of the damage caused by the actions of careless drivers.

Essential Essentia Links

🌐 Website: https://essentia.one/
💡 Whitepaper: https://essentia.one/whitepaper.pdf
👨 ANN Thread: https://bitcointalk.org/index.php?topic=2704531.0
💻 Telegram: https://t.me/essentia_one

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