P2P Insurance Challenges

Smart contracts are powerful means for enforcing rules which hold, transfer, receive, or spend digital assets. What the internet did to liberate information blockchain technology is now doing to facilitate agreements. Insurance requires much more than the facilitation of trustless payments. The real challenge is figuring out how software code can automate the underwriting of policies, the validation of claims, and the verification of the state of places, people and things in the real world.

With any type of insurance you need to be able to limit the scope of a policy. Every policy is going to require an applicant to meet a set of initial conditions before being approved as a new policy holder. The more complex these initial conditions the more complex your smart contract code becomes. Since we have never created a peer to peer smart contract for insurance before what type of insurance has the least number of initial conditions?

Insurance requires that you be able to verify statements made by applicants and claimants. How can you verify if what a claimant says is true? Traditional insurance organizations rely on evaluators, auditors and claims adjusters who process various pieces of documentation. Will a smart contract need to hire a fulltime staff to perform these functions in order to process claims or can they find and use oracles to validate if what a claimant says is true? Oracles sit on the edge of a blockchain and allow smart contract code to know the state of events in the real world. What oracles can best validate conditions of a claim?

True peer to peer insurance implies that new polices are underwritten and new claims are evaluated by current policy holders rather than fulltime employees of the DAO. How can you create a system where existing policy holders are qualified and competent enough to underwrite policies and evaluate claims?

Creating DAOs require that you create new governance mechanisms which take advantage of the power of blockchains to reach consensus. How you do this yet is not that clear as there are no good working models of DAOs yet which are currently performing any useful functions. Dynamis will provide solutions to all of these challenges in its implementation of supplemental unemployment insurance on Ethereum. To discover possible opportunities of peer to peer insurance continue reading here.