How smart contracts can change the insurance industry : Benefits and challenges of using Blockchain technology

Abstract: The world is becoming more and more digitized. Recently many industries have started to research the blockchain technology and particularly smart contracts. One industry that so far has not adopted new technology in the same pace as other industries, is the insurance industry so this interview study aims at finding opportunities and challenges for insurance companies that want to learn about smart contracts and its use cases.By doing a literature review and performing interviews with blockchain experts and insurance company employees, this study found that both IT companies working with smart contracts and the insurance companies have limited knowledge of the legal aspect of smart contracts. The lack of standards and regulations allows IT companies to freely create smart contracts without much quality control. The insurance companies must innovate themselves in order to not be disrupted. The blockchain technology will offer many new insurance types and if the insurance industry fails to adopt the blockchain technology they may face market disruption.There is much room for future research following this study. It would be beneficial to research how contract theory could be used in practice during the creation of legally binding smart contracts. Furthermore, research around fraud prevention in smart contracts would be interesting as would an in-depth exploration of the ecosystem of third party software and services around smart contracts.