The legal sector is increasingly becoming automated and one aspect of this is the business of administering contracts. Change is happening rapidly, and the potential for offering better customer service, and cutting costs, is something that insurers, brokers and MGAs need to have a look at.
Here’s the latest from law firm Clyde & Co:
Clyde & Co has today launched a first-of-its kind off-the-shelf connected parametric insurance contract for use by insurers through its smart contract consultancy, Clyde Code.
The contract has been built in collaboration with smart legal contracts platform Clause and according to the specifications developed by the Accord Project, although it can be deployed on other systems and platforms.
Lee Bacon, Partner at Clyde & Co and co-founder of Clyde Code, said: “A connected contract is a digital agreement which links external software systems and data sources to enable the automatic execution of insurance contracts. By using real-world data and streamlining processes it offers significant cost and efficiency gains for the industry.”
The connected parametric insurance contract — which consists of a data model, a logic code and a supporting natural language contract — covers the insurance of a solar energy producer against the risk of a shortfall in expected energy generation due to unfavourable weather. It automates the performance of the policy by receiving weather data, calculating potential claims obligations, and producing an exportable report of insurance premiums or losses.
Clyde & Co will use this model to build other bespoke or off-the-shelf connected contracts for clients.
Bacon continues: “Connected contracting will bring many benefits to our clients and we are looking forward to expanding the scope of this product to cover different types of insurance and reinsurance agreements to meet client demand. Its launch is an exciting new step for Clyde Code and our work to help clients realise the potential of smart contracts.”
The use of parametric products is on the rise in the insurance sector and are being rapidly adopted at local, regional and national levels as they provide a solution for risk-transfer concerns, often for populations that were previously uninsured and for whom the protection gap has traditionally been widest.
Read more about the connected contract in a case study here.
This launch is part of Clyde & Co’s focus on innovation, led by the firm’s Innovation Board. In September 2017 the firm launched Clyde Code, a hybrid technical-legal consultancy advising insurers on every aspect of smart contracts, blockchain and tokens – from creation through to implementation and enforcement. Since September 2018 the firm has been providing legal services to Komgo, a consortium of leading banks, trading and energy companies that digitalise trade and commodities finance processes through a blockchain-based open platform.
In November 2017, the firm launched its Data Lab, which uses data analysis supplemented with machine learning tools to explore workflow efficiencies as well as products and services for clients.