Chainlink Virtual Hackathon prize winners Lukas Sexton, Luis Ramírez, Ahmad S, and Mike Robinson used a Chainlink External Adapter to connect a marine shipping water level API to a Chainlink oracle to create a parametric insurance product for marine shipping. Parametric insurance smart contracts are good examples of how developers can use Chainlink to connect smart contracts with off-chain APIs to automate legacy insurance models. In this post, the team explains the thinking and implementation for the project.
By Lukas Sexton, Mike Robinson, Luis Ramírez, and Ahmad S
Climate-related uncertainty is leading to more unpredictable seaway conditions such as low or high water levels, which can result in the temporary closing of major shipping channels. If the St. Lawrence Seaway temporarily closes, an estimated $193 million is lost per week in the U.S. economy. Last year, the channel was closed for 12 days, costing the U.S. economy an estimated $331 million.
The global marine insurance industry is approaching $30 billion and growing due to increased seaborne world trade. However, unpredictable closures of major shipping seaway channels present a significant financial risk to commercial shipping companies and downstream economies.
We want to make modern life for inland marine cargo transportation businesses more manageable during the times that matter most by providing a 21st-century insurance solution to help them adapt to the effects of a changing climate.What Is Parametric Insurance?
Parametric insurance is a financial tool to mitigate risk by protecting oneself against potentially devastating events. Parametric insurance is a type of insurance whereby the policyholder receives a predetermined payout based on a specific predetermined event.
Traditionally, parametric insurance products are purchased globally. For example, the International Bank for Reconstruction and Development (IBRD) issued a $485...