4 avenues of the blockchain exchange insurance industry

Blockchain was quickly adopted as a new technology and its impact has spread to many segments of the insurance industry including crop insurance, insurance, flight delays, insurance transport and professional insurance.

According to the AdvisorSmith study, by 2020, more than 30% of small businesses will be uninsured, and 75% of entrepreneurs will say they have experienced an emergency that requires a loss meet the year. One of the main reasons is that the insurance industry always struggles with small businesses as they often have to go through a long and difficult application process and there is no way to purchase insurance. Small businesses must redouble their efforts to find insurance products that suit their needs and budget, and weaker groups such as farmers may not be able to obtain insurance.

Parametric insurance can solve the above problems for some as it is caused by prior events and consumers do not have to go through a long payment process. However, insurance contracts are still costly for insurers and require insurers to access a wide range of unknown businesses and hire people to take care of them, review non-essential cases, verify that events have taken place. actually produced and finally authorize payments. Usually these charges are sent to end users. However, blockchain technology can make insurance products cheaper, faster, and more usable for commercial products.

The logic of parametric insurance is based on smart contracts. A smart contract is a digital process on a blockchain that, when an X event occurs, can be terminated by pre-existing processes such as Y completion. An oracle organization, such as Chainlink, can connect the blocks to the appropriate external. data, determine if payment terms are met and have insurance companies. The insurance automatically pays the payments according to the logic predefined by the smart contract. The combination of blockchain, smart contracts and oracle networks will better deliver parametric insurance to small businesses, lower operating costs, provide insurance companies with expertise, protect their needs and implement instead of which insurance policies decide to apply. Blockchain marketing cannot be linked, so the role can be fulfilled, smart contracts can be successfully concluded, and the Oracle network can connect blocks to data around the world to ensure that events actually happen and automatic payment. the process cannot be controlled by humans.

Insurance companies can guarantee coverage based on a predetermined and identifiable objective assessment, allowing the insured to go through multiple claims procedures and receive reimbursements more quickly. The following will specifically discuss the four parametric blockchain insurance products. These products can maximize security and reduce risk for small businesses.

01

crop insurance

According to Arbol, a parametric health insurance company, $ 1,000 billion in crop risk excludes insurance. Many of them are in developed countries and many local farmers have no way of obtaining insurance. It is also difficult for small businesses or individuals in bad weather to get the coverage they need. Due to climate change, the weather has become unpredictable and weather forecasting has become more frequent, resulting in a demand for the weather insurance industry in the market.

Parametric crop insurance can protect the economic benefits of farmers in any country. For example, there are commercial products on the market that allow you to purchase Arbol insurance coverage with just a smartphone. Arbol partnered with Chainlink to obtain weather data from the National Oceanic and Atmospheric Administration and developed parametric insurance contracts. For example, if the data sent through the Oracle network indicates less than 20 inches of precipitation in two months in a given area, the farmer may be eligible for insurance.

With this type of insurance, farmers don't have to waste their farm in bad weather or relocate their families because they know they will benefit quickly. Because all the work done by the chain and the payment is done in accordance with an external certification, the payment process of insurers can be made more efficient: accountability, transparency and fraud prevention.

02 ib

Theft and delay insurance

Everyone in the industry experiences the effects of slow flight. Airlines cancel flights to pay passengers, but delayed flights can cause passengers to miss important events or changes. Delayed passengers are forced to book new flights at a higher rate. However, new technologies are still emerging to meet different needs. The use of new blockchain technology by insurance companies such as Etherisc will also support the development of the insurance industry.

With parametric flight insurance, travelers heading to important meetings can pay the difference without rushing to the latest flight manual due to flight delays. If the flight is canceled or the flight cannot leave on time, the parametric insurance company automatically pays the insurance to the insurer. In this way, business travelers can use this gift to speed up new flights. Because most airlines do not notify passengers of the approval timeframe beforehand, if parametric insurance has access to more information about the planes, passengers will have time to change direction.

03

Logistics and supply chain insurance

For businesses, events with minimal results are generally not covered. However, these situations can often have serious repercussions. For example, there is an urgent need for post-contagion as a few companies do not have pre-contagion coverage. Parametric insurance is designed for conditions with very high variability and minimal occurrence, such as contamination and inclement weather. The oracle network can also connect data from IoT sensors to the blockchain to provide security services to businesses, which can be used to avoid the risk of poor governance, such as quality delivery issues, especially loss of market. due to product damage.

One of the advantages of parametric insurance is the possibility of modifying the insurance contract. For example, a company's labor supply is affected by winter storms, so you can prove yourself against the risks. While it's not clear how hurricanes will affect travel time, Parametric Insurance can obtain ice data for specific areas from the National Oceanic and Atmospheric Administration and use it as a basis for claims. assurance. Although the delivery of goods may be delayed or due to storms, sellers may afford some protection.

Connecting IoT data to the oracle blockchain can improve the quality of data transport. If the refrigeration sensor detects that the temperature is affecting the safety of the product, parametric protection can increase the load. Connect oracles to sensors (such as PingNET networks connected to Chainlink for the benefit of the payment chain) and payments can take place. This type of parametric insurance reduces the payment period (Note: a quality control of the defective product generally takes place at the time of payment). In addition, the customer can check whether the merchandise is in good condition as it is pre-registered in the blockchain if there is any security issue when receiving the merchandise.

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Professional insurance

Live events such as concerts and sporting events are also often affected by weather conditions and catastrophic events such as sports. Since these activities are generally not available for purchase by conventional regulations, parametric insurance can play a role in this area. Organizations can prevent this risk by compensating for losses incurred by eliminating incidents. Participating organizations are required to reimburse all participants if they cancel or reschedule a meeting or schedule an event. Parametric insurance can also pay for participating organizations in this regard. In addition, if you are concerned with attendance, you will be billed for parametric insurance. There are also many variations in the insurance contract that the colleague will insure for a certain amount of money. Mark Cuban, developer of the dClimate blockchain weather data project, pointed out in a recent interview with the Wall Street Journal that Dallas Mavericks (warning: he has Dallas Mavericks) could also prevent by purchasing this weather insurance. Be prepared for danger.

Compared to conventional insurance contracts, parametric insurance is cheaper, faster, more transparent and more flexible. Small businesses can change their own insurance products and skip payment and long-term processes. Blockchain insurance can reduce risk, open up critical investments, and achieve stable performance in unprecedented ways, which can lead to changes in the insurance industry.