The East Coast of the United States is expecting a powerful Category 4 Hurricane Florence, and as it approaches the coast of the US states of North and South Carolina, meteorologists expect it be “the most intense storm to strike the region in at least 25 years,”
To remove the multiple layers of inefficiencies in claiming damage compensation from insurance companies, blockchain startup Etherisc has developed a smart contract based pay-out program.
Smart Contract-Powered Insurance Workflow
Switzerland-based Etherisc aims to automate the claims process for people adversely affected by natural disasters, in order to reduce the amount of time it takes to receive compensation. The current, or traditional, insurance pay-out system requires approval from many different third-parties before payment is made.
Etherisc plans to move key parts of the insurance workflow to a smart contract-based system, so that the claims process can be handled more efficiently. However, Renat Khasanshyn, the co-founder of Ethersic, said his company would not be able to help the victims of Virginia (also affected by the hurricane) this time around.
Khasanshyn explained that “launching a product in multiple locations is no easy task” and it can take a lot of time to implement (automate) the appropriate insurance policies for different regions.
Decentralized Insurance Protocol
Founded in 2017, Etherisc is a decentralized insurance protocol designed to help people “collectively build insurance products.” According to the platform’s official website, their automated insurance pay-out program is fully open-source and has been developed on the Ethereum blockchain.
After reportedly raising $3.6 million from its initial coin offering (ICO), the Switzerland-based firm has been involved in assisting several companies to move (or migrate) their legacy systems over to a smart contract-enabled insurance workflow system.
Part of the migration process includes writing insurance policies by using templates of self-executing code that come with smart contract libraries. Data obtained from reliable sources such as estimates of the damage caused by natural disasters can also be used to automatically issue insurance claims payouts.
Notably, Etherisc’s blockchain-based insurance protocol is currently being used by Puerto Rico-based tech startup HurricaneGuard to develop a better solution for natural disaster victims. This, after the president Trump-led US administration was heavily criticized by San Juan, Puerto Rico mayor Carmen Yulín Cruz for not responding effectively to last year’s Hurricane Maria, which hit and severely affected Dominica and Puerto Rico.
Highly Inadequate Emergency Plans
A research study published recently by the George Washington University’s Milken Institute of School of Public Health revealed that the US administration’s emergency response was highly inadequate. The institute’s research indicated that the disaster recovery plan was only fit to handle a Category 1, whereas Hurricane Maria was a catastrophic Category 4 hurricane with wind speeds exceeding 150 mph, leading to nearly 3,000 deaths.
In an attempt to resolve these inefficiencies, which have now left about 225,000 unprocessed (and unresolved) insurance claims, Khasanshyn said:
Our plan is to begin writing policies for the next hurricane season in Puerto Rico.
Additionally, Etherisc aims to automate several insurance payouts based on wind speed data provided by Colorado State University. At present, the projected losses from Hurricane Florence have been estimated at $170.2 billion.
While smart contracts have been criticized by bitcoin developer Jimmy Song and prominent economist Nouriel Roubini, the leading French insurance firm AXA has reportedly introduced an Ethereum-based flight insurance program. The smart contract-powered software is designed to automatically issue payouts for cancelled flights.