On-demand motor insurance is the latest innovation in insurance. It provides flexibility to customers for choosing insurance policies that meet their requirements at lower costs. On-demand insurance enables customers to insure specific automobile parts for a specific amount of time. Such insurance services cater to specific customer requirements with significant cost reduction
The key features of on-demand insurance are:
The above features make on-demand vehicle insurance fast, cost-effective and easily accessible. Let’s take a look at how smart contracts enable on-demand insurance.
From a technical perspective, on-demand motor insurance requires a digital platform that provides insurance with a high level of granularity. Users upload images of motor parts they want to insure using the app with proof of ownership as well. Insurance of the motor parts can thus be set up with a few easy steps.
However, several on-demand insurance processes are currently manual. Verification of ownership and authenticity of the claim and identification of motor parts are time-consuming processes. Thus, even if an insurance application occurs in real-time, it takes days for it to become operative.
It is possible to accelerate on-demand insurance processes by automating manual tasks. Blockchain technology and smart contract can achieve a high-level of automation for error-free verification of products and users. Smart contracts have the potential to enable on-demand vehicle insurance using sensor data. Here’s how blockchain and smart contracts can improve motor insurance:
Apart from these benefits, on-demand insurance with smart contract solutions can lower the cost of policy modification significantly.
A distributed ledger technology (DLT) based platform can connect users with insurance companies to implement on-demand vehicle insurance in real-time. It will also connect the original seller of the insured product and previous insurers to the on-demand insurance provider. The provider can customize the functioning of the distributed ledger with smart contracts to suit business requirements. Smart contracts can also determine the level of access required by other participants in the insurance process. A permissioned blockchain can authorize product sellers and previous insurers to verify data. It is possible to develop permissioned blockchain by customizing DTL platforms and coding the smart contract for desired operations.
Sensors play an important role in the automation of on-demand vehicle insurance with smart contract solutions. A sensor installed on the vehicle sends mobile notifications when any motor part malfunctions. The sensor will also send the barcode or any product ID for verification to the mobile app.
The smart contract will verify the data with the product vendor, previous insurers and the on-demand insurance provider. It will match the data with pre-installed terms set by the stakeholders to check the authenticity of the product. The smart contract will verify and approve a transaction initiated by a user.
The device with the installed decentralized application acts as the ‘Blockchain Node’ for the user. The user initiates a transaction as an on-demand insurance request to the provider. A transaction contains a serial number, product ID, image, barcode or QR code. The data is uploaded on the ledger via the mobile app. The smart contract will approve the insurance request after verifying the data with stakeholders and the insurer. The automated operation is instantaneous as it processes the request in real-time.
It is also possible to develop this process to provide insurance money to users and settle claims instantly. After verifying product data, smart contracts can release insured funds to customers.
A smart contract, DTL and sensors together have the potential for providing new ideas to innovate insurance offerings. On-demand insurance is now popular across the insurance industry apart from automobile insurance. Blockchain and smart contracts can be combined to develop efficient insurtech platforms for on-demand insurance services and products.
We develop on-demand insurance platform with standard DLT like Hyperledger. Hyperledger Fabric provides the functionality to achieve operational efficiency with automated on-demand insurance. The platform can store the smart contract program written in any language including Solidity. We can also develop decentralized on-demand insurance applications using Ethereum and R3 Corda, which are standard enterprise blockchain platforms. We program efficient smart contracts that automate the operations between various participants in the on-demand insurance process.
According to Capgemini, automated claim settlements with smart contracts can save up to 21 billion dollars for the vehicle insurance industry. Blockchain is emerging as a prime enabler of efficient and cost-saving enterprise operations. We are open for consultation to develop efficient insurtech solutions to implement on-demand insurance platform with smart contract.