Yesterday, the Institutes RiskStream Collaborative announced that it will work with B3i Services, the blockchain insurance consortium that was incorporated in 2018. Several insurers are members of both organizations, with RiskStream more U.S.-focused. Jointly they will run Labs to explore the potential for homeowner parametric insurance and reinsurance.
Automation technologies such as blockchain make parametric insurance more viable. One of the biggest challenges with insurance is the cost of assessing and processing claims. If someone has flood insurance, sensors can measure whether the flood impacted a particular zip code and automatically make a fixed payout to the insured, no matter what damage they suffered.
On the one hand, this could benefit homeowners by enabling far quicker payouts and potentially lower premiums because the administrative costs are reduced. On the other hand, while some will get payouts despite little damage, for others the payout might only cover a fraction of their actual costs.
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