NEWS - LLOYD’S OF LONDON
PARAMETRIC INSURANCE AND SMART CONTRACTS TO IMPROVE CUSTOMER EXPERIENCE Parametric insurance and smart contracts could help insurers offer customers better products and services, according to two new reports published by Lloyd’s today.
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he smart contracts report, Triggering Innovation – How smart contracts bring insurance to life, has found they could be used to increase efficiency and add value for customers. Smart contracts are contracts that are either totally or partially automated by computer code, reducing the time taken to get a policy to the customer and a claim paid. carry out various insurance processes such as risk placement, premium payment, warranty enforcement, and claims assessment and settlement. The report describes four practical applications for smart contracts in
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the cargo, contingency/aviation, agriculture and property catastrophe classes, and shows how full claims and/or workflow automation could be applied to further classes in the Lloyd’s market. The parametric report, Triggering Innovation – Parametric insurance (only available to Lloyd’s market participants) identifies similar benefits. Parametric policies trigger a pre-defined level of claims payment quickly after pre-agreed parameters have been exceeded, such as an earthquake over a certain size. As policies are based information such as previous loss events and independently verified data, insurers have more scope to design products for risks that could otherwise be uninsurable or underinsured. The report also contains three case studies (available to everyone) that demonstrate how Lloyd’s parametric policies are helping agricultural producers in Europe, the UK and the US manage the risks to their businesses. Trevor Maynard, Lloyd’s Head of Innovation, said: “The Lloyd’s TABLE OF CONTENTS
parametric products highlighted in the report demonstrate the value of combining the best underwriting and broking expertise in the Lloyd’s market with the latest technology to deliver outstanding products and services to our customers. While smart contracts are a nascent technology, they offer exciting potential to transform the customer experience and it’s something we are looking to develop at Lloyd’s. These reports offer in-depth analysis of how insurers can use new technology and products to benefit their customers, and ultimately generate new business.” Caroline Dunn on definitive, Lloyd’s Head of Class of Business, said: “Lloyd’s welcomes the underwriting of risks on a parametric basis for a diverse range of classes of business for a variety of customers, including re-insureds, as well as personal and commercial lines’ customers. We have worked to provide Lloyd’s market participants with a thorough insight into the parametric insurance market, including legal considerations, design features and the applicability of parametric products within Lloyd’s.” www.chart-exchange.com