20 December 2021: Major blockchain oracle Chainlink (LINK) and the US-based meteorology reporting service AccuWeather recently announced a partnership that will allow AccuWeather to run a live node on the Chainlink network. This will allow for the development of on-chain weather related services, including the reporting and distribution of AccuWeather's meteorology data and even blockchain-based insurance applications.
The implications of blockchain-based insurance, especially through a major meteorology service like AccuWeather could have an extraordinary affect on the insurance industry overall.
AccuWeather's Chainlink node will provide weather data to various blockchain applications through smart contracts. Through this set up, AccuWeather anticipates the "[creation] of new products and markets, such as weather predictions, hedging markets, dynamic NFT art, and games based on current weather conditions in localized regions" (AccuWeather
How Chainlink & AccuWeather Want to Disrupt the Insurance Industry
By leveraging Chainlink's smart contract applications and cryptographically distributing AccuWeather's high quality meteorology data, novel blockchain application users will be able to have a high degree of confidence that the data and information they are receiving is coming from a trusted source - that source being AccuWeather.
Chainlink and AccuWeather have identified two distinct blockchain-based insurance use cases that are to be explored through this new partnership. The two identified use cases are:
- Parametric Insurance
- Crypto Insurance
The idea here is the replace traditional insurance models by leveraging smart contract technology. Connecting external or off-chain data with smart contracts means that the data can be broadcast to the blockchain with a high degree of confidentiality and overall security - two prominent features of the major oracle Chainlink.
Parametric Insurance
This type of insurance covers specific events such as weather events like a drought, storm, or other disaster. This insurance class has two different sub-types that have been identified by both Chainlink and AccuWeather as grounds for immediate use.
- Crop Insurance - This insurance sub-type, identified by AccuWeather as a top priority within their blockchain insurance motivations, would allow for farmers to take out insurance policies to protect themselves from poor crop yields. Chainlink offers an example of specific drought insurance in which a farmer takes an insurance policy out via smart contracts that execute if the farmer's locations receives under a determined amount of rainfall.
- Flight Insurance - This example is utilized to demonstrate the necessity of the Chainlink oracle leveraging smart contracts to deliver accurate data. There are three different parameters that Chainlink/AccuWeather can address for parametric insurance like flights. They are:
accurate data delivery
2. secure delivery of policy pricing
3. automation of payout processes
Crypto Insurance Products
The other identified area of major insurance-based opporunity is through the rise of cryptocurrency-based financial insurance. This can have a massive reach in terms of use cases, especially when considering the growing sector of DeFi within the crypto-economy.
Some examples of use cases here include:
- Lender Insurance
- Fraud Protection
- Health, Auto, Home Insurance Applications
- Micro-Insurance for Emerging Markets
Blockchain Insurance Providers Utilizing Chainlink
There are numerous exmaples of on-chain insurance providers that are leveraging both crypto insurance products as well as parametric insurance products. Chainlink's research group have already identified the insurance industry as a mulit-trillion dollar industry that is set to be disrupted by blockchain/smart contract technologies.
Blockchain in Insurance - Chainlink
The growth of this industry overall is expected to continue to expand, creating a double-whammy of potential growth for blockchain applications offering smart contract enabled-insurance products.
Some specific examples of on-chain insurance providers utilizing Chainlink are:
- Acre Africa
Now that AccuWeather is partnered with Chainlink, all of the above providers will be able to leverage AccuWeather's world leading meteorological data sets to provide various new on-chain insurance products to their respective customers.
You don't have to be an expert in insurance to realize the vast market opportunity that both Chainlink and AccuWeather are tapping into here. Capturing even a small market share percentage of the broader insurance market would be absolutely massive in terms of financial capital exposure for both Chainlink and AccuWeather.
This is not to mention that with the growth of on-chain insurance applications, the corresponding disruption of the insurance industry overall could even entice traditional insurance providers to adopt blockchain and smart contract technology. Chainlink's heavy interest in blockchain insurance could be a massive growth opportunity for LINK in the future.
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