A Solution to Blockchain Smart Contract Based Parametric Transport and Logistics Insurance

Traditional insurance policies pay the insurer according to the actual loss or damage to a tangible object that is insured. Due to the numerous parties involved, the settlement procedure is usually highly drawn out. Comparatively, parametric insurance protects a policyholder from the occurrence of a particular event by disbursing a predetermined sum dependent on the severity of the event. In the transportation sector, supply chain disruptions caused by delays are precisely the kind of event that parametric insurance may be able to cover. Transportation delays can happen for several reasons. Events like adverse weather, heavy traffic, and poor road conditions can all slow down the logistics supply chain. An occurrence triggers parametric insurance claims. Unfavorable scenarios can be insured, and claims can be automatically processed depending on policy criteria and conditions. The standard centralized database technique can be utilized to build parametric insurance schemes; however, the data is open to manipulation. This article examines how to create parametric transport insurance using blockchain. It discusses user journey, technology solutions, design and implementation problems, and parametric service insurance. The blueprint for transportation parametric insurance can be used in other fields including Agriculture (Crop Insurance) (Jha et al, 2021), Disaster Insurance (Parametric disaster insurance, Feb. 2023), Aviation, Travel, and manufacturing industry.

Automated summary

Traditional insurance pays based on actual loss, while parametric insurance pays a predetermined sum based on the severity of an event. Parametric insurance can cover transportation delays and automatically process claims. This article discusses creating parametric transport insurance using blockchain and the potential applications in other fields.