In the midst of a global pandemic, flight insurance is more important than ever. But traditional flight insurance doesn’t guarantee smooth and timely reimbursement for delayed or canceled trips. The policyholder has to file a claim with correct documentation and wait for a clerk to take up their case. This process can take weeks or even months and is often fraught with inefficiencies and human error.
Consequences are compounded for businesses that suffer financial losses from cancelled or delayed shipments of essential and perishable goods. Waiting for compensation through insurance can substantially increase the impact of these losses.
Blockchain-based parametric insurance expedites this process through immutable protocol that predetermines the exact parameters which automatically trigger reimbursement. Decentralized oracle networks connect smart contracts on a blockchain to the real-world information, such as flight and weather data, needed to execute these payouts. Oracles also connect DeFi’s growing capital to insurtechs innovating parametric solutions across a range of industries.
Ensuro is a decentralized capital provider for parametric insurance risk that’s bridging the gap between insurtech and DeFi by integrating Chainlink Data Feeds to build parametric insurance products backed by real-world events. The initial integration uses high-quality aviation data from FlightAware and Chainlink oracles to trigger automatic settlements for parametric flight insurance policies.
Ensuro CEO Marco Mirabella told Chainlink Today that Chainlink’s oracles provide indispensable infrastructure between DeFi and insurtech. “By deciding when policies must be reimbursed, oracles regulate the flow of capital between these two components,” he said. “On a bridge, oracles would be a traffic light telling cars when to stop or when to cross onto the other side.”
In order to facilitate real-world use of DeFi capital, Ensuro obtained in-principle approval for a reinsurance license in Bermuda. “The license allows Ensuro to partner up with insurtech companies and to compete with the established players while guaranteeing its partners the safety coming from operating in a regulated framework,” Mirabella explained.
As the first licensed, decentralized reinsurance company, Ensuro will collect capital from retail and institutional liquidity providers through a smart contract-governed liquidity pool, with plans to provide additional returns to liquidity providers by reinvesting capital into decentralized finance protocols such as Aave.
The Chainlink integration provides a framework for Ensuro to scale through additional Chainlink data feeds that enable parametric solutions across new insurtech segments. “The whole team at Ensuro admires Chainlink a lot, and we believe it is the most established and reliable way to inject real-world data into the blockchain,” said Mirabella.
From his perspective, an insurance company that utilizes DeFi to support novel insurance products was a dream just a few years ago. Now that it is possible, he said, “it is also thanks to Chainlink.”