Many are pondering the use of blockchain-based smart insurance contracts in the future. However, Allianz has published a sobering insight which demonstrates the importance of a grounded  outlook.

Allianz’s ‘Smart Contracts: 5 Things to Know’ report explains how smart contracts work and outlines the dangers.

Pros and cons include:

Pros

1. All parties using a smart insurance contract can monitor the progress of its fulfilment.
2. No single person has unilateral control over a smart contract.
3. Ideal for processes including supply chain management and fraud detection.
4. Provides an irrefutable audit trail and transparency.
5. It should increase insurance document processing efficiency.

Cons

1. Smart contract technology is in its infancy and people are unfamiliar with it.
2. Migrating to a blockchain platform costs money.
3. It increases the risk of cyberattacks.
4. There’s no legal framework designed for smart contracts and blockchain.
5. Blockchain and established financial systems can’t yet interface.

Our business community is living in interesting times. Click here to read Allianz’s full commentary.

Also, if you need assistance in finding suitable or competitive insurance coverage, please contact us.

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