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Colorado State University

As Hurricane Florence barrels toward the eastern coast of the United States, a new kind of disaster relief is on the horizon.

Currently, when hurricanes and other natural disasters strike, a whole fleet of insurance professionals goes into action. From insurance adjusters and agents working for insurance companies to minimize fraud to reinsurance companies that protect insurance companies and retrocessionaires that look after the reinsurance companies, the entire industry starts to look a lot like a Russian doll of loss prevention.

The end result of the complicated web of professionals that stands between a disaster and a payout can sometimes be weeks or months of delays while otherwise avoidable suffering continues unchecked.

To bring some sense to that chaos, and perhaps remove a couple layers of redundancies and inefficiencies in the process, Switzerland-based Etherisc is part of a growing global effort to automate parts of the process using self-executing code, or smart contracts on the ethereum blockchain.

If successful, the work to move the insurance workflow to a shared, distributed ledger of transactions could eventually lead to the automatic payout of certain kinds of support. But for now, victims of Hurricane Florence, now speeding toward several eastern states at 140 miles per hour, will have to wait.

“We’d love to offer policies in Virginia,” said Etherisc cofounder Renat Khasanshyn, referring to one of the places the Category 4 hurricane could make landfall. “Yet launching a product in multiple locations is no easy task.”

Etherisc was founded in 2017 as an open source platform to help create insurance products using the ethereum blockchain. After raising $3.6 million in an initial coin offering (ICO), the early-stage startup is already helping other companies write insurance policies using the smart contract code. By plugging in data from trusted third parties for everything ranging from cancelled flights to wind speed, a wide range of payout events could be automated.

For example, in response to last year’s Hurricane Maria, an insurance policy powered by Etherisc technology is now being developed by HurricaneGuard, an insurtech startup based in Puerto Rico. At stake are not only the approximately 225,000 insurance claims that remained unresolved four months after the hurricane made landfall but also the estimated 3,700 deaths that resulted from lack of access to medicine and other provisions following the disaster.

“Our plan is to begin writing policies for the next hurricane season in Puerto Rico,” said Khasanshyn.

After that, Etherisc hopes to use wind data from Colorado State University to trigger certain insurance payouts elsewhere around the world. “Our interpretation of the underlying numerical weather model shows that hurricane Florence will slow down its progress over the land, which may cause significant losses,” said Khasanshyn.

If Hurricane Florence makes landfall as expected later this week, it will be only the fourth Category 4 hurricane on record to do so in the region and could damage as many as 759,000 homes, with a reconstruction cost value of $170.2 billion.

The application of a distributed ledger used by insurance counterparties may seem far-fetched, but French insurance giant AXA has already launched an ethereum-powered flight insurance tool that automatically pays out for cancelled flights, and a consortium of the largest insurance companies in the world has formed B3i, a for-profit entity aimed at implementing a wide range of insurance tools using the R3 distributed ledger.

As for HurricaneGuard, the founders last month met with the office of the commissioner of insurance of Puerto Rico and are seeking a license to sell insurance in the region. In the meantime, HurricaneGuard co-founder and team lead Jonathan Gonzalez says the project is onboarding its first distribution partners and finalizing its incorporation in the state of Delaware.

“While we are definitely tracking Florence closely and running test policies,” said Gonzalez. “We can’t officially offer policies in a location without getting the required regulatory approval.”

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