Arbol, a technology-led underwriter of parametric risk transfer, climate and weather insurance or reinsurance businesses, has partnered with the Institutes RiskStream Collaborative to put parametric reinsurance trigger data processing and verification on the blockchain, a first of its kind .
The duo called it the “first on-chain data calculation tool for reinsurance,” and said it would simplify parametric loss calculations and improve transparency across the industry.
The new platform, dubbed “dRe”, is already live and in production, so it can already be used to support the efficient triggering and monitoring of parametric reinsurance contracts.
It’s a smart contract-based system that “provides efficient and transparent parametric loss calculations for severe storm disaster transactions,” the company noted.
It sources weather data from Arbol’s decentralized climate data network, dClimate, and Chainlink’s industry-standard decentralized oracle network, so the platform can trigger smart contracts based on wind speed and the location of specific risk events.
This isn’t the first parametric insurance solution to use oracles and smart contracts to automatically trigger contracts, it’s been done before, but Arbol says it’s the first on-chain data calculation tool for Named Storm parametric reinsurance transactions , not a pilot project.
Using technology to monitor weather data in relation to triggers means claims can be automatically initiated, while notification and damage calculation can also be an automated process, providing fast payments, streamlining data flow and increasing transparency.
“dRe is an important advancement in Arbol’s quest to increase transparency and efficiency in the insurance industry,” explained Arbol Founder and CEO Sid Jha. “By leveraging blockchain technology and smart contracts, we are fundamentally reshaping the parametric (re)insurance landscape. This platform is not just a step forward; and reliable payments, changing the way we manage transactions for severe storm disasters. While our current focus is on severe storm events, the system’s design has far-reaching implications, paving the way for adaptation to other disasters.”
“Transitioning this parametric (re)insurance application to production on the RiskStream Canopy platform is a key demonstration of blockchain’s potential in the insurance industry,” added Dr. Patrick Schmid, President of RiskStream Collaborative. “We foresee this being the first of many applications we will put into production for the benefit of RiskStream members, the industry, and the public we serve.”
The dRe platform can also support other weather risks, such as rain, heat or wind, and is also potentially relevant for non-parametric insurance event notifications.
Let’s be clear, what matters here is the use of technology to provide automation of parameter triggering, notifications, claims verification and payments, not blockchain-based smart contracts or any other specific technology.
Making certainty, credibility and transparency of insurance and reinsurance contracts, as well as claims notification, settlement and payment as efficient, predictable and expeditious as possible can further improve the effectiveness of transactions, the reliability of coverage and ultimately the efficiency of venture capital , while also ensuring higher accuracy.
Therefore, platform development for parametric risk transfer, such as dRe, is an important step, regardless of the underlying technology they use.