Kalojan Georgiev has been running a successful $100M pharma trading company in Europe, Africa and Asia in the past three years. As the business was growing internationally, he observed a lot of dysfunctionalities in the healthcare system. Therefore, Georgiev sat down with a group of like-minded to brainstorm on what that magic twist could be that would tackle the challenges of healthcare system. The group came down to a conclusion that the insurance industry, including the health domain, and its logic in the past 100 years might be the underlying problem. They decided to do something and so Colibra was born.

It sounds excessively ambitious to change the overall insurance industry and it would require numerous licenses. Colibra’s team decided to enter the sector through the back door and start with the travel insurance where the regulation would allow them to test the market. The company, which is officially registered in Malta, is waiting for its license to start operating as a decentralized insurance platform by the end of 2019. The Bulgarian investment fund Eleven Ventures has found the venture interesting enough and has just put €250K into this idea.

Democratizing insurance

“One of the main challenges of the insurance industry is the lack of transparency and conflict of interest – the people who are handling claims are employed by the very same insurance company that would need to pay”, Miroslav Zaporozhanov, Chief Marketing Officer at Colibra, explained Trending Topics. According to him, the Insurance industry has changed to that extent when insurers think of paid claims as of losses. And this is what Colibra wants to change through decentralizing the decision-making.

After the first cryptocurrency enthusiasm wave, entrepreneurs started using blockchain for bypassing system bugs and middleman and decentralization of decisions. So does Colibra. In particular, Colibra aims to be an insurance company that would have trained but independent claim handlers who are financially incentivized to do their job correctly and not to save their employers money. The system would randomly decide who reviews which claim and save the activity on the blockchain so that the whole process is transparent.

But why blockchain?

Transparency seems to be only the one side of the equation. According to Kalojan, the immediate execution of decisions and the way it is done is far more interesting. Delayed claim payments are another major problem in the insurance sector so Colibra tries to fix that through smart contracts.“Once the decision is made, the sum is instantly and autonomously transferred to the client”, Georgiev explained. However, the blockchain systems are not allowed to touch banking accounts, so the team came up with the idea to use coins. “Those coins are not cryptocurrencies, banks don’t want to hear of cryptocurrencies, they are not traded, the value is stable and we have as many coins as dollars in the bank. They are rather encrypted payment order so we can communicate to the bank”, the founder explained Trending Topics. The startup is already in negotiations with several banks.

From a user’s perspective it would all look simple – buy insurance through app, claim through app, touch three buttons, get paid quickly. Colibra is a B2C company and wants to keep it simple on the front, and disrupt a whole system on the backend.

Colibra aims to be the next level of Lemonade, the US property and casualty insurance disrupter that has raised $180M, to reinvent the logic of insurance. Unlike the US company, the Bulgarian startup will start with the insurance industry. The segment is expected to hit 28B by 2022 and is growing fastest in Europe, a report by Allied Market Research states. “Our long term goal is to enter the general and then the healthcare insurance where we identify the strongest need for disruption of the model”, Georgiev said.

Now, insurtech is a trending topic and of course, Colibra is far from alone on the market. A quick scan of the startup offerings, however, shows that they are predominantly developing technologies for other insurance companies and work rather B2B.

Where are they now

Eleven Ventures has just backed the project, which is to a certain extent a validation for the company. Even though the idea and the team of 12 behind it seem promising, there is a long way to go. The platform is still in development and the first mini pilot products that don’t require insurance license will be launched early 2019. However, it is not clear how far the needed license is. In addition to that, Colibra will need at least €4M in the bank in order to get a license for operating as an insurance company.

The company is planning to fundraise. “We have a detailed and well timed plan so we have enough money in the bank when we need them to get the license. Colibra will raise another round in 2019 and we will be looking for smart money”, Georgiev stated.

“Colibra is a mix of very serious team and close to impossible mission. If they succeed it will be a major breakthrough in the system”, Daniel Tomov, partner at Eleven Ventures, commented the investment.