If you look at my validator intro, you will notice that I am an insurance guy. I believe that blockchain technology will play a critical role in the insurance industry sooner than most people realize. I also believe that the Oracles Network has the potential to be an early role player, if not a critical role player, in facilitating adoption of blockchain technology in the insurance industry. I want to highlight a few areas of opportunity for blockchain technology in the insurance industry and discuss the benefits that the Oracles Network can bring to the table. Today, I want to discuss:
Parametric insurance is a type of insurance that makes a specific payment whenever a certain condition, often called a triggering event, is met. Insurers like parametric insurance because it eliminates some of the administrative work involved like the claims handling process where claims adjusters determine if a claim should be paid and what the value of the claim is. If you ever filed an auto claim or a homeowner’s claim, you might remember it being a long drawn out process with annoying paperwork involved. Well, parametric insurance mitigates this by automating the process, which also had the added benefit of reducing fraud. This saves time and reduces costs for the insurer. Blockchain can help expand parametric service by automating the process entirely, which further drives costs down for insurers and can drive down premiums for everyone as well. AXA Fizzy’s smart insurance for delayed flights is a great example of parametric insurance utilizing Ethereum smart contracts today. Eventually, insurance data and technology may push a majority of insurance towards parametric insurance. Can you imagine a reality where the moment you car is rear ended, it transmits data to your insurer and you receive a claim payment automatically and shortly after? It might be our reality, and blockchain is critical to making this reality come true.
Where Does Oracles Network Fit In?
As I mentioned above, AXA Fizzy is already using Ethereum Smart Contracts to automate most of the delayed flight insurance process. This is great for AXA as it reduces costs, but it could be better. Right now, Ethereum transactions can sometimes lack consistency (imagine if you want to purchase a policy but the transaction is delayed by a slew of ICOs all happening on the same day) and don’t scale very well, which sometimes drives up the costs of transactions. As you can imagine, these can both be critical issues when the entire point of parametric insurance on a blockchain is to consistently reduce costs and to consistently save time (imagine all of the customer support calls when transactions are delayed and people are expecting instantaneous results). Despite this, insurers are still racing to research and adopt blockchain. Just imagine if these issues could be solved! Well, Oracles Network might be the answer. The Oracles Network deviates from Ethereum with its Proof of Authority (PoA) consensus, which aims to be more consistent and cheaper than the Proof of Work (PoW) consensus mechanism used by Ethereum (the Oracles Network team FAQ describes the PoA consensus very well!). Oracles Network also builds upon the Ethereum protocol, which means that the smart contracts that companies like AXA are using will be compatible on the Oracles Network as well! So, if it’s easy to deploy the same program on the Oracles Network, and it is cheaper/more consistent to deploy it on the Oracles Network as well, why wouldn’t insurers want to? I believe that they will, and it’s just a matter of time.
Thanks everyone! Feel free to ask questions, and if anyone is interested, I will continue releasing more. There are many more areas of insurance where blockchain is making a huge difference!