Before going into detail about Smart contract insurance. Let’s discuss a little bit about the smart contract. A smart contract is an insurance contract or policy that pays out when certain specified criteria are satisfied. Smart contracts, with their data-driven approach, are similar to traditional parametric insurance in that incentives are only paid out if a clearly defined event happens (for example, a flood, an earthquake, or even a flight delay). Smart contracts are housed in a decentralized environment with no manipulation and no middlemen, which means they may be resolved solely on the blockchain with full transparency and no human participation.
Benefits of Smart contract insurance:
- The absence of a third party ensures that payouts are made more quickly.
- Lower administrative costs
- Lower premiums
A smart contract in the modern sense is often based on blockchain technology. In essence, a blockchain is a database that records each transaction in a “block.” Each block often carries a hash/code that is unique to it and refers to the preceding item in the “chain.” If any data in any block of the chain is subsequently changed, all participants in that blockchain will immediately notice since that block’s hash (and that of any succeeding block) will no longer correspond to the later block’s record of that hash.
As a consequence, an indelible record has been created. Because blockchain technologies work on a distributed basis, they are referred to as “distributed ledgers.”
Smart contract life cycle phases
There are 4 main phases of smart contract insurance:
The contract’s contents and objectives are agreed upon by the parties. Following that, the agreement is converted into code using the development processes outlined above.
When a smart contract is added to the blockchain, it becomes public and can be accessed via the public ledger. At this point, both contractors must satisfy all of the contract’s terms, pay a fee, or deliver an asset in order for the blockchain to be executed further. Furthermore, transactions made to the smart contract’s wallet address are halted until all preconditions are satisfied.
When the smart contract is executed, it generates new transactions, which are then deposited on the distributed ledger. The consensus mechanism then validates these transactions.
After assets have been unfrozen and all transactions have been validated, a smart contract is deemed finished.
Smart contract blockchain examples
- For vehicle insurance: According to Capgemini, the use of smart contracts insurance in the vehicle market might result in a $21 billion yearly cost reduction worldwide. This is due to the advantages of adopting smart contracts for insurance, such as process automation and decreased claims handling costs.
- Real estate: Reduce the amount paid to the middleman and divide it among the persons directly engaged. For example, a smart contract that transfers ownership of an apartment whenever a particular quantity of resources is deposited to the seller’s account (or wallet).
- A smart contract that maintains track of car upkeep and ownership may be placed in a blockchain. The Smart contract insurance, for example, can compel car maintenance service every six months, failing which the driver’s license will be suspended.
- The music business might use blockchain to register song ownership. When music is utilized commercially, Smart contract insurance may be encoded in the blockchain, and royalties can be credited to the owner’s account. It can also be used to settle ownership issues.
These all are examples of blockchain smart contract examples
Ethereum smart contract example: Ethereum, the world’s second-largest cryptocurrency by market capitalization, was designed expressly for the creation of smart contracts insurance in 2013. It is currently the most popular venue for doing so.
Outside of Ethereum, smart contracts aren’t commonly utilized, and some are doubtful that they’ll ever become popular as a tool to govern transactions. Proponents of Ethereum, on the other hand, hope it will eventually become the standard for executing and safeguarding online connections.
Hundreds of smart contract-enabled apps are already live. MakerDAO and Compound, two popular Ethereum apps, leverage smart contracts at their heart to lend money and let users earn interest.
Smart contract insurance companies
The insurance companies listed below are at the forefront of utilizing smart contracts /ledger technology.
- 1. GUARDTIME
- 2. LEMONADE
- 3. ETHERISC
- 4. FIDENTIAX
- 5. B3I
- 6. DYNAMIS
- 7. FIZZY
- 8. TEAMBRELLA
Detail of Smart contract insurance companies
Guardtime creates blockchain solutions for areas such as cyber security, government, banking, defense, and logistics.
Guardtime recently partnered with logistics giant Maersk to build a smart contract insurance platform that would manage risk, employ smart contracts, and construct an immutable chain of shipments to assist insurance firms in providing comprehensive coverage.
Real-world example: In the first year, the company’s Insurance platform is expected to manage the insurance processes for over 1,000 boats. The platform is also expected to manage over 500,000 ledger transactions including relevant marine insurance information, according to the business.
Location: Irvine, California.
Lemonade combines artificial intelligence and distributed ledger technology to provide smart contract insurance to renters and homeowners for as little as $5 and $25 per month, respectively.
Blockchain insurance application: Blockchain is used in Lemonade via smart contracts. The business concept of the company deducts a predetermined charge from each monthly payment and assigns the remainder to future claims. If a claim is filed, the blockchain’s smart contracts will instantly seek to validate the loss so that the client may be compensated as soon as possible.
Real-world example: If your claim is validated, Lemonade’s AI and blockchain technology will pay you in three seconds. (In the category of renter’s insurance, Lemonade was ranked first out of 270 firms in terms of customer satisfaction.)
Location: New York.
Etherisc is a decentralized smart contract insurance application development platform that is open source.
Etherisc creates decentralized, blockchain-centric apps for several segments of the insurance industry. The organization is concentrating on employing ledger technology to reduce inefficiencies, such as excessive processing costs and lengthy claim-processing periods.
Real-world example: Etherisc has already created six decentralized insurance-related applications. One of these is crop insurance software that allows farmers to identify their land and crops, as well as any weather-related losses. Another program protects Etherisc members from potential crypto wallet hacks.
Location: Munich, Germany
FidentiaX is the first marketplace for exchangeable insurance policies in the world.
FidentiaX is a blockchain smart contract insurance application that allows customers to buy, sell, or keep their insurance policies on the company’s blockchain. The blockchain-powered marketplace tokenizes current regulations and stores them in an encrypted database. Users may cash out their plans, buy policies from others, or just see all of their insurance information in one spot in real-time.
Real-world example: FidentiaX just launched ISLEY, a blockchain-powered digital ledger for insurance policies. ISLEY provides consumers with a comprehensive overview of their insurance policies, alerts them when premiums are due, and maintains an immutable record of your full policy history.
The Blockchain Insurance Sector Initiative (B3i) is a group of insurers that have banded together to investigate the use of blockchain and Distributed Ledger Technology (DLT) in the insurance industry.
Blockchain insurance application: Founded in late 2016, the company’s objective is to use blockchain to enhance the management of data and payments, minimize risk, and make insurance cheaper. They are actively developing a number of applications related to their objective.
Real-world instance: The first product is create by B3i is a blockchain prototype for property reinsurance contracts. The organization was able to conduct the complete reinsurance contract procedure on a secure blockchain with the involvement of 38 insurers and brokers.
Location: Zurich, Switzerland.
Dynamis is a peer-to-peer insurance firm that is entirely based on the Ethereum blockchain. It is an Ethereum contract example.
Dynamis is a blockchain insurance application that focuses on unemployment insurance (or what they call “social capital”). To verify current job status, policy applicants merely need to furnish their LinkedIn profile. The company’s blockchain will verify through profile linkages and give insurance payouts to people who are unemployed.
Real-world example: The Company’s social capital integrates smart contracts insurance and a peer’s social network to double-verify a policy applicant’s job status. Dyanmis, which is still in its early stages, hopes to make its insurance more widely available in the coming months.
Location: London, England
Fizzy, a flight delay insurance tool is a subsidiary of AXA, the world’s largest insurance company.
Fizzy leverages blockchain to ensure that members whose flights are delayed for more than two hours are automatically paid. The blockchain technology used by the firm enhances travel insurance, which often does not cover financial losses due to flight delays.
Smart contracts are used in the tool to lock in payment and insurance conditions. Users merely need to enter their flight information, customize their coverage, and pay. Fizzy will then utilize the blockchain to validate flight delay data and recompense clients in an immutable manner.
Real-world application: By December 2018, Fizzy’s immediate blockchain-based flight delay payments will cover 80% of all global flights.
Location: Paris, France
Teambrella is a smart contract insurance platform that allows your team to co-insure your claims rather than a centralized insurance firm.
For example, a Teambrella member in the United States can notify the team that his or her dog requires emergency surgery. The rest of the squad will vote on whether or not to pay for the pup’s surgery and how much of the expense they should bear.
Teambrella is a blockchain insurance platform that leverages smart contracts and blockchain to make insurance payouts. Members of a certain Teambrella group are bound by a smart contract, which is used to transparently vote and execute payment for each claim.
Location: Saints Petersburg, Russia Conclusion: Here, The industryfuture describes the smart contract insurance, its benefits, Ethereum contract examples, and smart contracts blockchain examples. Moreover, explains the companies of the smart contract. We create this article by collecting information from the various sources. Please let us know your views on this topic in the comment section below.
• The absence of a third party ensures that payouts are made more quickly.
• Lower administrative costs
• Lower premiums
mart contract is an insurance contract or policy that pays out when certain specified criteria are satisfied.