Global law firm Clyde & Co has launched an off-the-shelf connected parametric insurance contract for use by insurers through its smart contract consultancy, Clyde Code.
“A connected contract is a digital agreement which links external software systems and data sources to enable the automatic execution of insurance contracts,” said Lee Bacon, partner at London-based Clyde & Co and co-founder of Clyde Code.
“By using real-world data and streamlining processes it offers significant cost and efficiency gains for the industry,” Bacon added.
The connected parametric insurance contract — which consists of a data model, a logic code and a supporting natural language contract – initially covers the insurance of a solar energy producer against the risk of a shortfall in expected energy generation due to unfavourable weather, said Clyde & Co., in a statement.
The contract automates the performance of the policy by receiving weather data, calculating potential claims obligations, and producing an exportable report of insurance premiums or losses.
Clyde & Co. said it will use this model to build other tailor-made or off-the-shelf connected contracts for clients.
The contract has been developed in collaboration with smart legal contracts platform Clause and according to the specifications developed by the Accord Project, although it can be deployed on other systems and platforms. (The Accord Project seeks to define a common specification for a smart legal contract layer to support any agreement type, said Accord on its website).
“Connected contracting will bring many benefits to our clients and we are looking forward to expanding the scope of this product to cover different types of insurance and reinsurance agreements to meet client demand,” continued Bacon “Its launch is an exciting new step for Clyde Code and our work to help clients realize the potential of smart contracts.”
The use of parametric products is on the rise in the insurance sector and are being rapidly adopted at local, regional and national levels as they provide a solution for risk-transfer concerns, often for populations that were previously uninsured and for whom the protection gap has traditionally been widest.
In September 2017 the firm launched Clyde Code, a hybrid technical-legal consultancy that advises insurers on every aspect of smart contracts, blockchain and tokens – from creation through to implementation and enforcement.
In November 2017, the firm launched its Data Lab, which uses data analysis supplemented with machine learning tools to explore workflow efficiencies as well as products and services for clients.
Source: Clyde & Co.
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