Block chain and marine insurance


nnnThe recent use of block chains in marine insurance has received much attention and some typical use cases have emerged. This paper explains how the technology can simplify the maritime insurance process, confirms the potential and role of the chain chain in the field, but also suggests the practical problems that may exist in the implementation, and the people who care about the application are concerned with Thinking.n
nnTranslated by: Inan
nIf you are engaged in marine insurance work, then you must have recently heard of “block chain”. It is a distributed electronic book that is widely known for driving Bitcoin and ether coins. But the role of block-chain technology has gone far beyond the digital money field, it can provide creative ways to solve other practical problems.n
nIn a block-chain book, the use of “smart” contracts can basically translate contractual terms into computer protocols to facilitate, validate, or enforce its execution.n
nA lot of articles have been written to describe how this technology can affect the financial services and transportation industries. This emerging technology also has potential applications in marine insurance.n
nBecause many of the technology applications are just emerging, but also in the development stage, so few companies launched a large-scale implementation. But this situation will not last long.n
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nMarine insurance use casen
nMarine insurance is generally considered to be the earliest commercial insurance; this allows the customs, practices and policy provisions of the sector to be standardized and codified. Policy representations and customization of customization can enable maritime insurance to benefit from automation, especially the use of block-chain books and smart contracts.n
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nagency n
nIn this well-defined insurance policy, the basic terms and conditions are rarely changed, and the company’s risk managers usually seek standard policies directly from insurance companies or through brokers. The risk manager may submit specific policy terms that exceed the standard contract before or after the endorsement. These are standard practices.n
nHowever, the implementation and recording of these tasks on the block chain and the use of smart contracts to articulate these policies can simplify the insurance process and increase transparency for all parties.n
nIt is conceivable that the purchase of insurance will no longer require a financial intermediary; it can be executed by the buyer, and all activities are visible to the stakeholders. The payment of the premium will be made available directly to the insurance company and then confirmed to make the policy to be implemented.n
nIn this case, the dispute will be easier to resolve because the block chain book will record all transactions permanently and tamper with. Such public books can be made available to all participants in order to achieve transparency and trust between the parties.n
nThe anonymity can be maintained by assigning the non-descriptive key to each party or making the block chain open only to the participant. This process will greatly reduce the errors and omissions, because the parties can verify every transaction, and always have this right.n
nOther ancillary work, usually carried out by brokers and insurance companies, can also be automated; since policy norms already exist on the database, a comprehensive insurance certificate can be quickly generated and visible to interested parties.n
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nMaritime claimsn
nThe biggest impact of the chain chain on the insurance industry may be claims and payments.n
nIn complex maritime insurance, when the goods are transported around the world, their insurance covers the entire voyage or a small part of the voyage. In the course of transport, they face many dangers, and the ownership of these goods will usually occur during the flight several times.n
nIt is a daunting process to track the relevant documents on a global basis by tracking the source of loss or damage in accordance with the insurable interest. Hosting this information on openly shared block-chain books will allow the adjuster to make informed decisions faster, thereby reducing the time required to compensate customers.n
nThe smart contract can be designed to compensate immediately after the notification and verification of the loss, especially if the goods are all lost. If there is an easily verifiable loss, the default criteria will trigger the payment process so that the funds are transferred immediately.n
nFor example, a shipwreck accident makes it easy to prove and the documentation is complete. In this case, only a few lines of code can be compensated, the code will be in the block chain when the specific criteria are met to respond.n
nIn the event of loss of goods, the smart contract can also be designed to compensate for the loss immediately on the basis of the preset trigger conditions.n
nUnder the basic policy, drugs or food that are contaminated or thawed in advance may also constitute a complete loss. If the temperature of the refrigerated container exceeds a certain threshold, the total loss can be easily and verified by the inspector’s report or other trade document showing the violation. The loss will be compensated immediately through the smart contract.n
nSimilar to the “general average” principle in the law of the sea, similar transactions can also be shared among the various stakeholders of the voyage. An example of “general average” is also added to the block chain database to immediately publish a common average guarantee book to reduce the time required to release the goods.n
nIt is true that some of the complex processes in the claim need to be further improved and that the consent of the insured and the insurance company is required before signing the contract.n
nFor example, the residual value of the goods and the responsibility of the insured to reduce the loss in the event of a complete loss must be clearly understood and enforced. Smart contracts can immediately transfer ownership and recovery rights to insurers, although insurers often refuse to give up their goods. This will encourage the insured to reduce losses when still holding ownership of the damaged goods.n
nThese complexities of insurance contracts may not be easily captured by smart contracts, but the terms and conditions of the policy will provide guidance.n
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nMaritime Insurance: P u0026 I Club and othersn
nCompared with commercial insurance, there are more and more companies in the field of personal insurance. In the past few years, the emergence of the use of P2P model of the regional chain of insurance companies, and commercial insurance companies are cautious test the water.n
nThe P u0026 I Club is another organization that is mature and capable of using block chains and smart contract technology through P2P mode. “Encoding” of the smart contract can automatically collect progress, supplement and notification and other information. Once the claim is reported, the loss reserve can be created based on the user input.n
nSmart contract programming languages ​​can cover most of the association’s rules or insurance agreements and insurance conditions and are automatically enforced.n
nThe management of the association can also be streamlined as a decentralized autonomous organization (DAO) composed of shipowners. The decentralization and public nature of the block chain eliminates the need for potential business partners to trust.n
nYou can hire consultants as part-time trustees – responsible for updating association rules and basic codes, and claims payments can be made through a “voting” system based on an investigation report (when the smart contract does not cover the entire content).n
nThis hybrid approach can be automatically paid under compliance and, in the case of partial losses, a more equitable and more applicable claim can be achieved.n
nThere is almost no obstacle to implementing this type of DAO: the code is open source, and can be updated through technical knowledge, brokers will be gathered together to make the system in place, this concept is not far away.n
nIntermediaries will make the risk of compensation, other members of the vote may also increase the new risk, and pre-set insurance standards can prevent any “negative risk” into the association.n
nOwners are not the only ones that can benefit from the use of block chain technology in mutual aid societies; between shippers can also create similar agreements or DAOs that insure each other’s cargo losses. These types of organizations – composed of potential business competitors, can benefit from risk sharing and the use of systems that do not rely on trust to resolve claims.n
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nPerform the detailsn
nThe current barriers to implementation are to explain the customs and practices of maritime insurance markets and to translate them into programming languages ​​to produce smart contracts.n
nIn this case, when the static nature of the computer logic can not act independently, the members of the fair can vote. The ambiguous situation will be the responsibility of the other party, coordinated by the impartial parties.n
nInsurance companies often rely on the evaluators to assess the loss of the situation; and these conditions may be very vague, may also be about the views of the investigators.n
nIn view of the current practice, insurance companies and their agents must remain vigilant against moral hazard. And this may be difficult when the process is implemented by computer code that automatically executes claims.n
nIn these cases, there is a need for a clear set of payment rules – an overview of the relevant policies and an understanding of the parties. In addition, the investigator may also need to act as an independent third party as a fair assessor, so that the automatic payment is not controlled by the insured.n

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