This is the second in a series of posts that breaks down our article, “Smart After All: Blockchain, Smart Contracts, Parametric Insurance, and Smart Energy Grids,” recently published in the Georgetown Law Technology Review. We previously discussed the enforceability of blockchain-based smart contracts under ESIGN and UETA and will now look at the application of blockchain-based smart contracts for simple insurance contracts. You can read the full article here.

Even though basic insurance contracts can often be boiled down to an agreement to make payment upon the occurrence of a discrete event, administration can quickly become complex. Claims adjusters are needed to assess a claim and its validity and disagreements can arise if parties later disagree about the interpretation of the terms or relied on representations outside of the policy. In addition, parties are often mistrustful of one another because of the potential for fraud, abuse, or denial of claims. In either event, insurance companies incur costs administering even the simplest of contracts, and those costs are often passed along to consumers in the form of higher premiums. However, reducing basic insurance contracts to “if-then” statements and digitizing administration would reduce the cost of administering these products and help overcome challenges of trust and transparency.

Continue Reading Efficiency Gains in the Insurance Industry

This is the first in a series of posts that breaks down our article, “Smart After All: Blockchain, Smart Contracts, Parametric Insurance, and Smart Energy Grids,” recently published in the Georgetown Law Technology Review. First, we will discuss the enforceability of blockchain-based smart contracts followed by four use cases: simple insurance contracts, parametric insurance, smart meters, and microgrids. You can read the full article here.

Smart contracts have the potential to impact a range of industries, and some are even calling 2017 “The Year of Smart Contracts.” Smart contracts can be used not only to automate existing processes, but also to create new industries and reach new markets. By providing a digital platform for coding “if-then” statements, providing a secure and resilient environment for value transactions, and preserving a detailed and immutable transaction history, the blockchain provides an ideal platform for smart contracts.

With companies and industries continuing to explore new blockchain-based smart contract applications, it is important to establish their enforceability.

Numerous questions have already been raised as to whether a contract on the blockchain is binding and enforceable. Vermont, for instance, has made multiple attempts to pass a law that would make blockchain evidence self-authenticating, and has finally succeeded in enacting one. Arizona recently passed a law clarifying that signatures obtained through blockchain technology are valid electronic signatures. We believe that the federal Electronic Signatures in Global and National Commerce Act (ESIGN) and state laws modeled on the Uniform Electronic Transaction Act (UETA) provide sufficient legal foundation for blockchain-based smart contracts to be enforced under current law.

Continue Reading The Enforceability of Smart Contracts

In the last installment of our five-part blockchain series, we focus on the insurance industry.  Insurance and reinsurance companies are actively exploring and developing applications for blockchain technology.  And for good reason – distributed ledger technology has the potential to revolutionize the way insurance companies operate and engage with their policyholders and to open a window into new products and new markets.

At the retail level, the blockchain promises to benefit both the consumer and insurer by simplifying the claims process, increasing efficiency of underwriting and claims handling, improving risk management, and reducing operational costs.  The blockchain will help ensure the security of private or confidential information, improve auditability and transparency, and increase effectiveness in fraud detection.  These enhancements will also help lead to an improved customer experience.

Continue Reading Insurance with Assurance