In the past years, we’ve seen a steadily growing interest in distributed ledgers and smart contracts. The financial industry has already been largely disrupted by these innovations.Technology
Although insurance has relied on conventional methods for decades, let’s explore the potential of smart contracts in the insurance industry, their limitations and the legal implications.
In very simple terms, a smart contract is a software program that automatically enforces the agreement terms when certain, predefined conditions are met. In other words, a smart contract acts as a virtual intermediary that executes transactions between two parties.
Ultimately, the insurance industry’s main challenge is a lack of trust and transparency between actors. According to Accenture, only 29% of customers trust insurers.
This lack of trust is mutual. Fraudsters commonly make false claims in the hopes of receiving payouts, forcing insurers to put extra resources into the validation of every claim.