The global insurance industry is exploring the use of so-called
smart contracts, and for good reasons. This digital innovation,
which uses distributed ledger technology, also known as blockchain,
offers potentially revolutionary advantages in transacting
insurance.
Blockchain technology and smart contracts offer the potential to create
and maintain living policy documents that are securely stored on
multiple, decentralized ledgers, making them impossible to misplace
or alter without permission, and at the same time convenient to
amend and share among multiple parties. Depending on how smart
contracts are structured, they can automatically execute payments
when certain parameters are met. That is a particularly interesting
innovation in the realm of insurance claims tied to specific
metrics, such as weather events. Even though blockchain technology
supports publicly visible transactions, such as those using
Bitcoin, it is possible to create encrypted, permissioned
