AXA, the French insurance firm, revealed a test run of a blockchain platform, that manages flight insurance.
Called “Fizzy”, the flight delay insurance product, which is a network of smart contracts, uses the public ethereumblockchain to store and process payouts. It has the ability to scan data sources for information on delayed flights, and if those flights match an outstanding insurance policy, a pay-out is automatically triggered.
The initial test only covers direct flights between Paris Charles de Gaulle and the U.S., however, AXA’s plan is to expand the scheme internationally in 2018.
Fizzy might be an example of a sub-genre of parametric insurance, whereby it does not compensate for the loss, but a triggering event leads to the issuance of a pre-established pay-out.
Parametric insurance has the capacity to streamline risk management, lower costs and increase customer satisfaction due to the elimination of uncertainty. Even though, it is traditionally limited to large-company catastrophe bonds, however, blockchain technology enables parametric policies to “go small,” cover a broader range of eventualities and reach a wider spectrum of audience.
A blockchain platform eliminates the need to submit paperwork and to request pay-out authorization, and it ensures that the issuer will honor the trigger as the embedded conditions are unchangeable.