Collaborative and parametric insurance on the Ethereum blockchain

TL;DR

This paper presents a novel blockchain-based insurance system on Ethereum that combines parametric triggers with collaborative token-based governance, demonstrating a proof of concept with open-source code.

Contribution

It introduces an integrated blockchain insurance scheme with smart contracts, tokens for governance, and deployment on Ethereum, advancing decentralized insurance models.

Findings

Smart contract implementation in Solidity successfully deployed on Ethereum testnet.

Tokens effectively represent participant shares and voting rights.

Open-source code facilitates further research and development.

Abstract

This paper introduces a blockchain-based insurance scheme that integrates parametric and collaborative elements. A pool of investors, referred to as surplus providers, locks funds in a smart contract, enabling blockchain users to underwrite parametric insurance contracts. These contracts automatically trigger compensation when predefined conditions are met. The collaborative aspect is embodied in the generation of tokens, which are distributed to surplus providers. These tokens represent each participant's share of the surplus and grant voting rights for management decisions. The smart contract is developed in Solidity, a high-level programming language for the Ethereum blockchain, and deployed on the Sepolia testnet, with data processing and analysis conducted using Python. In addition, open-source code is provided and main research challenges are identified, so that further research can be carried out to overcome limitations of this first proof of concept.