The current problem with insurance policies is that the claims process can take weeks or even months to be paid. The process is still very manual and requires a large degree of human action. This adds up to a lot of administrative costs, which result in higher premiums for customers.
Insurance companies can automate insurance policies by writing them into a smart contract.
When the input conditions of the smart contract change in an insured event, for example in the event of a catastrophic natural disaster, then the claims process is triggered immediately.
Measurable parameters of the event, such as wind speed, location of a hurricane or magnitude of an earthquake can be recorded onto the blockchain. Variable with the complexity of the smart contract, as the parameters cross certain pre-agreed thresholds, the claims process is triggered immediately and the exact amount of financial payout can be delivered without need for human-driven intervention.
Not only does the smart contract reduce the administrative costs associated with fulfilling such policies, but transparency and trust in the process is visible to all stakeholders and all regulatory bodies – thanks to the distributed nature of the smart contracts on the blockchain.
In an industry, such as the music industry, either the artist themselves or a publishing company own the rights to the content put out.
As such, these copyright privileges allow the holder to receive a royalty fee every time this content is used for commercial purposes. The issue with the current system is knowing who owns these rights and then to ensure that royalty payments are distributed to all who are legally obliged to receive payment.
A smart contract solution here, built on a blockchain, would keep track of all ownership rights. This ensures trust in true ownership – as any changes to the data on the blockchain requires a consensus from all parties on the network.
As a consequence of knowing true ownership at all times, the same smart contract would ensure that a royalty payment is generated and paid in real time – with the added benefit that as the transaction is broadcast across the blockchain, every relevant stakeholder can instantly reflect this on their accounting.
The Internet of Things will bring the era of everyday devices having the ability to connect with the Internet, and therefore to blockchain systems.
Currently, for example, your parcels can get lost in the post. In an Internet of Things connected world, with sensors every step of the way – from the shelf in the warehouse, flying through the air on a delivery drone, right to your doorstep – a fully self-automated system will ensure this doesn’t happen.
Each sensor forms its own node on a blockchain and Smart contracts can record “possession” of the device to each individual sensor (and subsequent location). A barcorde / NFC chip / other tracking device on the package will be read at each sensor on the way to your house. Each time it is read by a new sensor, it’s location is broadcast to and agreed on by all the IoT participants on the blockchain.
As each recording of the package’s location is encrypted into the blockchain in a specific order, there is no securer system for tracking packages. A smart contract then keeps tabs of “possession” all the way along the line, solidifying the trust of exactly where to find the package.
Smart contracts have a wide range of possible use cases – for businesses, individuals and for IoT devices themselves.
