TECHNOLOGY

In an environment where risks seem to be more volatile in terms of climate change and health crisis events , the need to create products that provide fast payouts has become a necessity . Parametric insurance has evolved alongside blockchain , and now , leading insurtechs are readily using it for their products and services .

According to reports , the first smart contract was created by computer scientist , legal expert and cryptographer , Nick Szabo . The creator of his own digital currency known as Bit Gold , Szabo saw the potential of blockchain technology back in 1994 . Initially , the concept of converting digital contracts into coded smart contracts was just a theory because in the mid-90s , there were no discernable use cases for them . Today , however , Szabo ’ s foresight can be admired as something conceptualised a quarter of a century ahead of its time .

Reask , a climate risk focused technology insurtech , for example , provides parametric cover for customers at risk of flood damage . When they take out the cover , a parameter for flood levels is pre-set . If that level is met , payments are automatically triggered , saving the customer from having to make a claim or have the case underwritten .

Breach Insurance is also using the parametric model to provide cover for investors in the crypto space .

Can smart insurance contracts combat cybercrime ? Yes . As the rate of cybercrime increases , in direct correlation with vast data gathering by corporate entities with the IoT , the urgency to secure information has increased massively – because when serious breaches happen , they cost a fortune to fix .

For example , Indiana-based Anthem Insurance suffered a data breach in 2015 that

44 November 2022