Smart contracts in Insurance and Warranties

The current problem with insurance policies and Warranties is that the claims process can take weeks or even months to be paid. The process is still very manual and requires a large degree of human action. This adds up to a lot of administrative costs, which result in higher premiums for customers.

Insurance companies can automate insurance policies by writing them into a smart contract.

When the input conditions of the smart contract change in an insured event, for example in the event of a catastrophic natural disaster, then the claims process is triggered immediately.

Measurable parameters of the event, such as wind speed, location of a hurricane or magnitude of an earthquake can be recorded onto the blockchain. Variable with the complexity of the smart contract, as the parameters cross certain pre-agreed thresholds, the claims process is triggered immediately and the exact amount of financial payout can be delivered without need for human-driven intervention.

Not only does the smart contract reduce the administrative costs associated with fulfilling such policies, but transparency and trust in the process is visible to all stakeholders and all regulatory bodies – thanks to the distributed nature of the smart contracts on the blockchain.