The insurance industry is riddled with systemic flaws including fragmentation and opacity that prevent efficiency and promote contentious relationships between independent entities along the insurance value chain. As a result, the process of settling claims and compensating policyholders is exponentially more costly and time-consuming than it needs to be. The traditional insurance model is broken. Secure, automated, transparent hybrid smart contracts offer a solution.
Hybrid smart contracts powered by Chainlink decentralized oracle networks (DONs) have already given rise to a new strain of insurance products. Recently, B2B SaaS insurance solution OTONOMI integrated Chainlink Data Feeds to deliver parametric on-chain insurance products that are triggered independently and executed at a fraction of the traditional cost.
The result is a secure, seamless, transparent claims process.
“Blockchain, oracles, and smart contracts together offer a platform that allows insurance actors to fit like Legos and operate automatically, all in a transparent and unanimously agreed-upon process,” said OTONOMI’s CEO, Yann Barbarroux.
“Blockchain, oracles, and smart contracts together offer a platform that allows insurance actors to fit like Legos and operate automatically, all in a transparent and unanimously agreed-upon process.” – Yann Barbarroux, CEO of OTONOMI
Currently, OTONOMI uses Chainlink to deliver secure flight data and arrival times from multiple high-quality sources directly to its air cargo insurance smart contracts. In the future, Barbarroux said OTONOMI plans to integrate Chainlink as it expands vertically (e.g. luggage and ticket insurance) and horizontally (e.g. sea cargo insurance and device warranties) all while deepening security with more data and oracle nodes.
By reducing claim resolution times from weeks to minutes and lowering administration costs by up to 90%, OTONOMI helps insurance carriers and reinsurers generate more net revenue and offer better customer experience. The potential savings is enormous for global industries like ocean cargo, where delays and disruptions like the recent Suez Canal blockage cost businesses billions of dollars every year.
The Suez Canal disaster alone left shippers and forwarders with tens of billions of dollars in losses. According to Barbarroux, insurance companies could ultimately compensate less than 1% of those losses “due to the opacity in policies’ fine prints and complexity in insurance resolution.” He said claim automation with Chainlink solves the opacity problem plaguing the insurance industry.
“Before Chainlink, we would have to fetch data to use as our event trigger via a normal API call to a flight data service,” he explained. “With Chainlink’s decentralized oracle network integrated directly into OTONOMI’s digital policies, the process that determines whether a policy pays out is completely transparent, secure and objective, and there is a clear and transparent source of truth that all parties can agree on.”
Because it is “incredibly easy to integrate,” Barbarroux said Chainlink is essential to OTONOMI’s vertical and horizontal expansion. Chainlink also allows hybrid smart contracts to incorporate confidential data points that are still publicly verifiable, which is key for industries, like insurance, that need to protect private consumer data. “Without Chainlink, we could not offer a publicly verifiable, transparent, and scalable operation,” he said.
He described OTONOMI’s integration with Chainlink as a long-term journey.
“We’re extremely happy with what our integration with Chainlink has enabled us to do so far, and how helpful the Chainlink team and community have been for our integration. We, the OTONOMI team, are incredibly excited to see what more we’ll be able to accomplish with Chainlink.”
To learn more about OTONOMI, visit their website, Twitter, Medium and YouTube.