Despite being a natural-use case for blockchain technology, travel insurance products offered via blockchain are likely a number of years away in the US due to insurance being highly regulated, industry experts say.
Blockchain “definitely will have a place in travel insurance,” said Ryan Brubaker, chief information officer and executive vice president of operations at travel insurance company Seven Corners. “As far as the capabilities, there are really numerous areas where blockchain will change the insurance business and the travel insurance business.”
When most people hear “blockchain,” they think about cryptocurrencies like Bitcoin or Ethereum. And while blockchain is the underlying technology behind cryptocurrency, it is its own technology with many other uses.
At its core, blockchain is an immutable ledger that records transactions and tracks assets, some tangible like cash and some intangible like patents or copyrights. The ledger is replicated, shared and synchronized, giving all parties access to the same data at the same time, making it a cost-effective way to track assets because it eliminates intermediaries.
For example, the technology could recognize a flight delay and automatically send out a payout, with no human verification necessary.
Early this year, German blockchain startup Etherisc launched FlightDelay, an insurance product that uses blockchain to automatically issue policies and execute payouts for flight delays and cancellations on some 80 airlines. Policies can only be purchased, and claims paid out, with cryptocurrency. It is funded via an insurance risk pool supported by investors.
Christoph Mussenbrock, a mathematician, physicist and co-founder of Etherisc, said flight delays were a natural place to offer a blockchain-based insurance product because data on delays and cancellations is readily available, enabling automatic payments. It also enables Etherisc to avoid higher claims-processing costs and achieve savings on data protection costs because blockchain itself is so