ParametricX: Marketplace for Insurance Policy Acquisition
Looking for experts in Web3 with NFT Marketplace development background?Learn more
The insurance industry is undergoing disruptive changes due to the massive adoption of blockchain technology. Here is a case study of our collaboration with an InsurTech startup, Decentro, on the creation of an insurance marketplace, ParametricX.
The client is an InsurTech startup that aims to make disaster insurance more accessible to developing countries by creating a distributed and decentralized insurance pool, therefore making the overall process more efficient and manageable for all stakeholders.
The client turned to 4IRE with an inquiry to create a marketplace for natural disaster insurance. This blockchain-based platform should allow buying insurance coverage for disaster events in a specific location. The users buying an insurance policy would specify their location and the particular type of natural disaster (e.g., an earthquake) which would be tradable and identifiable via NFTs. Users wishing to earn revenue on the platform can either become liquidity providers or purchase the existing insurance policies on the secondary market.
The initial discovery phase did not yield a concrete technical roadmap for the project; neither were the cost estimations ready. The 4IRE developers worked in tandem with the delivery team and managed to complete the MVP on time and within the fixed-price project budget.
Another challenge we had to manage was a delay in the front-end design of the platform, which became a bottleneck for further project tasks. Thus, the 4IRE team working on this project was extended with an additional front-end developer to address the project’s scope and deadlines.
Development of the ParametricX insurance marketplace commenced in July 2022 and is currently ongoing. The team involved in this project includes 7 specialists from the 4IRE developer staff: a project manager, a devops engineer, a lead developer, a backend developer, two frontend developers, and a blockchain engineer.
The first phase of this project involved discovery; then, the team transitioned to development. Starting from January 2023, we transferred to the support contract model with the client.
The platform we built for the client is a blockchain-powered NFT marketplace for insurance policy trading. The platform supports three kinds of services enabled via parametric smart contracts:
- Insurance sale. To obtain insurance coverage, users can select a location and a specific type of natural disaster, such as a hurricane, earthquake, volcano eruption, or tsunami, to protect themselves or their assets from such catastrophic events.
- Liquidity provision. Liquidity providers can invest money on the platform to re-insure insurance policies and gain returns from their investments.
- Secondary insurance market. Secondary market liquidity buyers can acquire existing insurance policies from the platform, anticipating that a natural disaster will not transpire.
Once the insurance policy is purchased, it gets tokenized on the platform as an NFT, with the funds paid for the policy invested into a digital vault for the agreed period of insurance coverage. The policy token can then be resold to another holder.
The project is still in progress, but the 4IRE team has already submitted the MVP to the customer. The platform’s benefits for users are:
- Trustless operations on the blockchain allow quick and automatic insurance payouts without the involvement of intermediaries.
- Efficient, automated functioning of insurance collection and payout using smart contracts.
- Attractive model of profit-sharing among liquidity providers on the platform.
- Highly customizable insurance contracts covering end-users’ specific needs.
- Broad geographical coverage around the world for underinsured and uninsured populations.
Thus, the resulting platform is expected to become a one-of-a-kind insurance marketplace that allows simple and transparent insurance policy management and gives broader access to the insurance industry to all kinds of stakeholders.