In Russia’s Novosibirsk, SurruS blockchain anticartheft system is being operated. Its prospect market is rather vast since in 2017 Russian police registered nearly 34K thefts of various vehicles. Yet the startup is not aiming at domestic market only.
Far reaching solution
Vladimir Kosenko started developing his Avto Poisk (Car Search) antitheft system in 2007 after his expensive Lexus GX-470 was stolen and his insurance company found a loophole which allowed it not to pay full indemnity compensation. The entrepreneur had a team from Russia’s Academy of Sciences Novosibirsk branch headed by Sergei Glushkov, involved with the project. The idea of the developers was not attempting to prevent a car theft, but to make sure a car is eventually recovered. For that, several transmitting devices are installed at a vehicle, which transmit minor, below 1 Byte, messages in response to a request by a crawler. Its range of operation is about 700 meters.
In 2009, the first technical solution was available, a device of a cigarettes box size. Its efficiency was tested in the office of director of Novosibirsk Region criminal investigation department. Vladimir Kosenko suggested that policemen can hide a vehicle anywhere in the city and in case his employees fail to find it, it could be kept by the law enforcement agency for its own needs. Eventually, the car was located within 1.5 hours. Following that impressive demonstration, the company started cooperating with regional authorities. In a while, all public transportation vehicles of Novosibirsk were equipped with Avto Poisk devices which, first of all, monitor drivers’ abidance by traffic regulations and besides operate SurruS system. Since there are about 300 public transportation routes in Novosibirsk, the entire urban agglomeration was thus covered.
Car recovered or refunded
Once the information on a car theft is officially received, the search algorithm is instantaneously activated for identifying an approximate location of the vehicle. A search operation is only initiated when a statement is submitted to a police office by the victim. Search efforts are supervised by a neural network.
A search operation involves company employees, police officers and volunteers from among other SurruS users. The one who finds the car, gets a remuneration of about 5% of the insurance indemnity amount.
In case Avto Poisk system fails to recover a stolen car, 100% of its market price is repaid by the company under a smart contract. The main product therefore is insurance against a car theft providing for the indemnity of the car’s full price. The concept was implemented once it became clear the anticartheft system is really efficient.
“The purpose of the SurruS project is ensuring, in case a car is stolen, that it is recovered by its owner. To accomplish that, we developed a special search algorithm and a special search network. Through the use of a blockchain technology, every owner whose car is not recovered, is entitled to be paid 100% of the vehicle market value. If the system fails to locate a vehicle, its 100% price is transferred to its owner in three days’ time. The owner will be able to use the money after the preliminary investigation is closed by police. Under the law, that happens after two months”, Dmitry Shuvayev, the project representative, says.
Blockchain guarded security
At the moment, the system is operated in Novosibirsk. In May 2017 a pilot project involving 50 vehicles was launched. By 2018 yearend, the project expects to ensure successful recovery of 70% of stolen vehicles and to extend the number of its ecosystem members to 500 owners of premium class cars. In case an accident takes place in a different city where the search system is not yet deployed, a search team travels there equipped with mobile search modules, including those installed on drones. Such a services is subject to an extra charge.
The next location for the anticartheft system deployment is Saint Petersburg, while in the long run the company targets foreign markets. To deploy the search network in various regions and to expand its modules production, an ICO is being arranged. SurruS is going to issue two types of tokens: SURR utility token which can be used for purchasing an insurance certificate as well as goods and services of the project’s partners, and SRS security token which generates some revenue for an investor (10% of insurance and 20% of monthly payments regardless of the aggregate corporate profit). According to Dmitry Shuvayev, SurruS expects to raise ETH 80K and to then expand the project in Russia, UK, France and Italy. It is already negotiating with some insurance companies in London the terms and conditions of entering the UK market where the main service of the company will be countering fraudulent thefts.
“We assess the implementation of our solution can save about $1.5 bln per annum”, Shuvayev says.
The blockchain technology is required to swiftly augment the system. Besides, the use of the distributed ledger technology helps saving on operational costs and taxes, since for all settlements within the community tokens will be used.
The project of the team from Novosibirsk is one of the first examples of employing blockchain in the Russian vehicles insurance market. According to Andrei Povarov, director of the Russian Presidential Academy of National Economy and Public Administration’s International Center for Joint Programs and Projects in Business Education, and associate professor at the Russian Presidential Academy of National Economy and Public Administration’s Institute of Business Studies, large insurance market players are with no hurry advancing with large scale projects, establish consortiums and startups, and launch simple but more interesting and streamlined projects which can make use of blockchain technology right away.
“In insurance industry, blockchain does not create a new market, but reshapes the existing one”, Andrei Povarov says. “In Russia, according to some assessments, it exceeds RUR 1 trillion ($16 billion). Depending on the swiftness of projects implementation, the nimble players can get quite a substantial share of that market”.
By Anna Oreshkina