Smart Contracts in Insurance

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Insurance sector is, as many others, affected by the development of new technologies. Indeed, the Blockchain technology promises to revolutionize the world of insurance by the use of smart contract, executed on a blockchain, to automate the execution of insurance contracts.

What Is a Smart Contract? 

In reality, a smart contract is less a contract than an IT program. Inside this program is codedin computer languagethe contract’s execution terms and conditions. Hence, when the pre-established conditions are gathered, the contract can run automatically without any human intervention.

A Concrete Example

InsurETH is a smart insurance contract protecting the policyholder against flight delay by compensating it automatically, from the moment the flight is delayed and without it is necessary to file a complaint to make it official.
But How the Contract Is Going to Obtain the Information of the Emergence of the Delay While the Policyholder Declared Nothing? 

Unfortunately, it is not possible to connect directly a database with a blockchain. Consequently, an entity called « oracle » is going to pass on the data, stemming from a reliable database (as that of the airport), to the contract so allowing to activate the automatic execution.

 

The InsurETH value chain ; Source : http://fintank.net/2016/06/09/insureth-smart-contracts/

Why Is Smart Contracts Interesting for Insurance Contracts? 

These smart contracts, registered and executed on a blockchain, has the capacity to create peer to peer insurances, thus eliminating any intervention of the current trusted third party like insurer. That odd insurance would also allow to eliminate the necessity to file a claim.

A propos de Justine WANDER

WANDER Justine, étudiante M2 Gestion et droit de l’économie numérique à l’Université de Strasbourg, passionnée par le droit numérique et les nouvelles technologies

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