Towards smarter, efficient and trusted insurance marketplaces through computable contracts

Computable contracts are programs that self-execute based on predefined conditions without relying on a trusted authority. The insurance industry will benefit from the thoughtful application of computable contracts across the value chain.

Computable contracts, i.e., programs that self-execute based on predefined conditions without relying on a trusted authority, was first introduced by Nick Szabo in the pre-blockchain world in 1996 and popularised in the DLT ecosystem by Vitalik Buterin in Ethereum. These contracts are executed via code, and cannot be easily tampered, unlike traditional paper contracts. With the rise of DLT, computable contracts have found renewed prominence.

Computable contracts and DLT-integration can yield significant benefits for insurers. Computable contracts can improve transparency, accelerate the claims process, prevent fraud, improve process efficiencies, and enhance the overall customer experience. However, to reap the benefits, enterprises must craft out a careful adoption and integration strategy, considering legacy modernisation and technology standardisation.

This joint publication with Rensselaer Polytechnic Institute examines the applications of computable contracts in the insurance industry, current challenges, and the way forward for enterprises in integrating computable contracts to achieve greater transparency and higher process efficiencies.