TECHNOLOGY

1 . Streamline information exchanges and payments between insurers and reinsurers

2 . Automate the claims-handling process

3 . Facilitate client onboarding

What is a smart contract ? A smart contract is a blockchain-based insurance contract that pays out when certain , pre-defined conditions have been met . Having evolved over the past decade , today , smart contracts are transparent and data-driven , and are therefore comparable to parametric insurance contracts . Because smart contracts exist in a decentralised space , they are tamperproof and secure as well as transparent . They can also be settled on the blockchain , with payouts only occurring once certain preagreed parameters have been met . Cheaper than traditional contracts , they are third-party free , which lowers administrative costs as well as premiums .

Just like traditional contracts , smart contracts set out strict parameters between two parties . However , unlike traditional contracts , smart contracts track insurance claims and hold both parties accountable .

Where are smart contracts useful ? Smart contracts are proving remarkably useful in the parametric insurance space . This is because they provide a simpler , more transparent solution to cover than that which is based on claim variables .

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