April 23, 2024


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Insurance Leveraging Blockchain Tech – TechAcute

Insurance: ugh. The mere mention of the word floods the mind with nightmarish visions. Such undelightful thoughts include three-hour phone holds, paperwork ad nauseam, and an army of suits whose sole intent is not to keep their end of the bargain. Insurance and easy seemed to have once been antonyms. That was, apparently, until Etherisc — the decentralized insurance solution — formed.

Blockchain-based microinsurance

German-based app developer Etherisc and Mittweida University of Applied Sciences in Saxony have teamed up to build what is known as the “blockchain-based decentralized insurance solution.” For anyone who just got a pounding headache reading that, here’s what it means.

In today’s bleak world of insurance, when someone wants to make a claim, he or she calls the company, fills out a form, or submits an online application. Then, a human being looks at the claim and analyzes it, oftentimes taking several weeks and even months to do so. According to Etherisc’s co-founder Christoph Muessenbrock, “traditional insurance models are characterized by cumbersome claims and payout processes, low levels of transparency, conflicts of interest, and low payout amounts.” He added that “we see a general shift in the insurance industry away from human-centric products, which involve a great deal of manual interaction, to data-centric ‘parametric products.’”

Image: Etherisc and BCCM

On Etherisc’s platform, the entire lifecycle of an insurance policy can be automated as software code, a so-called ‘insurance smart contract.’ Customers enter data for the policy online — say, flight info for flight delay insurance — connect their crypto wallet, and the microinsurance policy is live. It is saved on the blockchain and recorded in the Ether.

“Blockchain as a decentralized, shared ledger can massively improve transparency and thereby, fairness and accessibility,” Mussenbrock said. The only pitfall for many would be the Ethereum wallet, a bit of a hurdle for the less techno-savvy. For the two policies that Etherisc currently offers, crop protection insurance and flight insurance, the next step is where things get unconventional.

No more claims

For farmers looking to insure their produce, “once the insurance smart contract is active, it will autonomously track the weather data relevant to the farmer’s policy,” according to an Etherisc YouTube video. In theory, as soon as a claim is needed to be made, the AI will detect the conditions warranting its necessity and will immediately reimburse the customer.

“It pays out benefits…based on a predetermined index, such as rainfall, measured by weather stations or by satellites, rather than based on an assessment of the actual damage,” Etherisc stated. “They, therefore, require no claims assessors and allow for cheaper, faster, and more objective claims settlement.” As soon as the agreed conditions are met, an API connected to the mobile payment network executes the transaction. No claims are needed.

Etherisc hopes to apply this concept of automated insurance to solve other problems. These programs are still currently in the “early design stage,” according to Mussenbrock.

Hurricane protection, “designed for low-income individuals and small business owners,” triggers payments when wind speed is “registered by weather stations within a 30-mile radius from insured’s permanent location,” according to Etherisc. Crypto wallet insurance protects against thefts and attacks against smart contracts, covering “up to $1M” according to the company. Finally, crypto collateral protection pays “up to 100% of the issued loan amount if the value of the collateral provided by borrower drops by 90% or more.”

Back up your loan with an overhyped cryptocurrency? Or a stablecoin annihilated by one snotty celebrity tweet? No problem, at least according to Etherisc.

Partnership with Acre Africa

According to Mussenbrock, this has the potential to impact so much more than Germany or even Europe. Such is seen in Etherisc’s venture into the Kenya DAapp market: working closely with agricultural microinsurance heavyweight Acre Africa. Kenya, which had been dealing with an unusual rain season, needed a new insurance solution for the mobile age.

In another partnership with supplies providers, Etherisc put a code on seed bags for insurance registration. According to the company, “when planting the seeds, the farmer can register the code using the SMS/USSD function on their phone.” The price of the insurance is included in the price of the seeds, simplifying the entire process. According to the company, the solution had the potential to reduce claim cycles from three months to under a week and was “well-received.”

Indeed, according to Professor Andreas Ittner, head of the Blockchain Competence Center Mittweida (BCCM) at Mittweida University, this company has broad-scoping potential. “Etherisc has an inspirational vision to make insurance fair and accessible through a decentralized open-source insurance protocol, and we are excited to bring our expertise to bear in the development of a joint product,” he said. “Together with Etherisc, we are exploring methods to incorporate the latest technological developments and harness the potential of blockchain technology to create meaningful insurance solutions for the benefit of all consumers.”

YouTube: Etherisc’s Journey with Acre Africa

Photo credit: The feature image used is owned by Etherisc and BCCM and has been provided for press usage.

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