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Bitesize InsurTech: NexusMutual

Nexus Mutual

NexusMutual is a blockchain-based mutual.

NexusMutual was founded by blockchain enthusiast and CFO Life, UK and Ireland at Munich Re, Hugh Karp. The business aims to use blockchain to make the mutual model more scalable. Hugh told us: “Mutuals were originally founded to help communities share risk. However, these mutuals struggled to grow as they (1) couldn’t build membership outside of their trusted community, and (2) couldn’t access external capital.” Insurance companies solved these problems to an extent, but “introduced a fundamental conflict of interest between the profit motives of the insurer and the customer motive of having claims paid.”

NexusMutual aims to use blockchain to solve these problems in two ways:

  1. Recording transactions on a shared ledger: This allows members to trust each other without knowing one another, thereby expanding the community.
  2. ‘Tokenising’ the entity behind the mutual: This makes membership rights tradeable, thereby providing access to external capital sources.

How does it work?

Customers sign up on the NexusMutual website, initially purchasing the NexusMutual token (‘NXM’) with the cryptocurrency Ethereum. These tokens are used to purchase insurance cover. In the event of a claim, details of the claim (stored on the blockchain) are made available to members on the NexusMutual website; there is a short window for members to vote on whether the claim should be approved. Members are rewarded for voting (with tokens) and claims (which are fixed in value) are paid out based upon the community’s consensus.

The business is currently closing a Seed funding round and aims to launch its first product, ‘Smart Contract Cover’, in Q4 2018. Smart Contract Cover protects users of the cryptocurrency Ethereum against losses incurred when Ethereum code is hacked (see this recent example). Only when this product is ready for launch will NXM tokens be made available for purchase via ICO, (see this Bitesize for an explanation of ICOs) with the ICO proceeds forming the mutual’s capital pool.

The Oxbow Partners view

In October 2016 we wrote about a Russian business called Teambrella; we likened it to a deconstructed Tiramisu. NexusMutual tastes similar.

We like the principles behind Blockchain-enabled mutuals: allowing insureds to vote on claims is, for example, nicely democratic. Whilst most InsurTech solutions are trying to change insurance (for example drones making risk engineering more efficient), Blockchain mutuals are taking it apart and rebuilding it.

But the main challenge is fairly obvious. Readers of this blog are probably (on the whole) not kept up at night by the risk of their Ethereum code being hacked. How big are the niches of ‘techie’ customers who want to engage with a Blockchain mutual?

We wonder whether the big opportunity might be commercial mutuals, for example P&I clubs. These mutuals have substantial premiums and a collaborative model: could they be the driver of growth for Blockchain mutuals?

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George Hanks

George Hanks is a Consultant at Oxbow Partners. You can reach him at

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