Understanding decentralised insurance

Decentralised insurance is an emerging model powered by blockchain technology that aims to disrupt traditional insurance by removing intermediaries. All participants, including policyholders, insurers and reinsurers, can potentially interact directly through a decentralised platform on a real time basis. Smart contracts (self-executing contracts with the terms directly written into code) can automate and enforce the execution of insurance agreements. At the heart of decentralised insurance are these smart contracts, which automatically execute and enforce the terms of an insurance policy when predefined conditions are met; they reduce the need for intermediaries, enhance efficiency and minimise the risk of fraud and can also be deployed to enable premiums and claims to be handled more efficiently and faster without the need to submit lengthy time-consuming paperwork. An example of this is Lemonade, which offers insurance for farmers in the event of a lack of rain. As the company state…