Hello Etherisc Community!
I’m a long time Chainlink supporter, recently discovered Etherisc through their channels, and have since fallen in love with the idea of a Decentralized Insurance Protocol. Having spent the past couple weeks contemplating potential use cases, I’ve run up against a problem (or perhaps a better word to use would be “limit” instead of "problem), and devised a potential solution.
Most insurance products require real world data outside the blockchain in order to settle claims. Some of this real data can be fed into the blockchain thanks to oracle networks like Chainlink. Weather data oracles, flight information oracles, and so on can be built and deployed to make decentralized insurance products such as lack-of-rainfall insurance, flight delay insurance, and so on possible. However, many insurance products require data reliant on some form of human judgement to settle claims. Such instances cannot simply be settled using an oracle solution, because Oracle solutions rely purely on API-pulled data and can’t apply the complexities of human judgement.
A great example of this can be found with car insurance. When making a claim to your car insurance company (whether it be Geico or Progressive or whomever), the procedure often involves determining things like fault (who caused the accident), magnitude of damage (where is the damage, how bad is it, and what are the cost of repairs), and dispute (handling disagreements).
One of the limits of an insurance protocol such as Etherisc is that determining fault, damage, and handling disputes can’t be resolved without human actors applying their individual judgements. Granted, perhaps in the future, artificially intelligent programs will be able to make such calls. However, that’s at least some time away. For now, some sort of subjective or intersubjective human adjudication process is necessary to resolve issues of fault, magnitude, and dispute for many types of insurance products. And the present inability for the Etherisc protocol to make decisions based on human judgement limits the types of insurance products that can be offered.
Kleros is a dApp which bills itself as “an open source online dispute resolution protocol which uses blockchain and crowdsourcing to fairly adjudicate disputes.” The way it works is that, when an individual or business files a dispute, Kleros selects a panel of jurors and sends back a decision to settle the dispute. Anyone can participate and make money as a juror, in effect creating a decentralized digital court system.
Imagine if Etherisc could leverage Kleros’s courts in order to offer insurance products for situations that require human judgement. As an example, let’s consider car insurance. Using the Etherisc revenue model for protocol users, a developer could hypothetically create a car insurance product. The problem is, the car insurance product would have no way of knowing if you got in an accident, whose fault it was, and how much damage was done. But what if, using Kleros courts, an insurance policy holder can file a claim? The claim would automatically be sent to a Kleros court, which would determine the fault and extent of damage and feed the result back to Etherisc. Etherisc would then pay out settled amount using funds from the risk pool.
And voila! Using Kleros courts, Etherisc would be able to factor in human judgement to provide insurance products for which such judgements are necessary to settle claims.