Otonomi Uses Data Feeds To Help Power Supply Chain Parametric Insurance Products

Otonomi is the first-ever decentralized platform to bring fully automated insurance contracts to the marine and cargo industry. Otonomi’s mission is to bring transparency to the historically opaque insurance industry through practical, real-world applications of blockchain technology.

Situation

Challenge

Data integrity is critically important to Otonomi’s insurance products as they depend on reliable data to determine whether an insurance claim must be filed or a claim paid out.

Solution

oracles help ensure that Otonomi’s parametric insurance contracts are executed with reference to highly reliable data that’s accessible on-chain.

Business Outcomes

Otonomi’s parametric insurance solutions reduce contract settlement times, decrease costs, improve risk-weighted performance metrics, and create a more transparent and reliable insurance experience.

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Situation

Challenge

Otonomi Needs Access To High-Quality and Reliable Data To Support Its Parametric Insurance Products

  • The ongoing supply chain crisis has highlighted dysfunction in the current shipping insurance model.
  • Hybrid smart contracts offer a new solution, enabling the automation of claims and better risk management.
  • Data integrity is mission critical to these smart contracts as it determines the outcome of insurance claims.

The ongoing supply chain crisis has highlighted fragility within both the logistics sector and the insurance industry that underwrites its day-to-day operations. Shipping delays and poorly managed supply chain risks have led to slow-downs that ripple through the entire economy.

Otonomi recognized the potential for hybrid smart contract technology to protect freight forwarders and shippers against delays and supply chain disruptions, enabling them to quickly overcome the inevitable challenges that arise in the global transport industry. Data integrity is critical to these solutions, as the data determines whether an insurance claim must be filed or a claim payout must be executed according to preset smart contract parameters. What Otonomi needed was a highly reliable, decentralized, and on-chain data solution that could enable anyone to verify the integrity of the data triggering their smart contracts.

An image showing that blockchains cannot natively connect to real-world data and events.
Otonomi requires an oracle service as blockchains cannot natively access real-world data and events.

Solution

Otonomi Integrated Data Feeds, Helping Enable It to Quickly and Reliably Execute Its Insurance Contracts Based on Accurate Data

As blockchains are deterministic and cannot natively access off-chain data, Otonomi requires a battle-tested oracle network that can reliably and flexibly deliver high-quality data on-chain to be used by its protocol. Already helping secure leading DeFi protocols responsible for tens of billions of dollars in smart contract value.

The Otonomi team chose to integrate Data Feeds to help trigger its parametric insurance policies with highly reliable logistics data. When the Network delivers an event trigger, such as a shipping delay, the corresponding insurance smart contracts are automatically executed.

oracles provide shipping data to Otonomi’s insurance smart contracts.
Otonomi’s smart contracts use data from the Network to determine whether to execute an insurance payout.

Business Outcomes

Otonomi Delivers a Superior User Experience

After integrating Data Feeds, Otonomi is now able to deliver a superior user experience that mitigates human error and prevents fraudulent transactions at a fraction of the cost of traditional insurance policies. And unlike traditional insurance contracts, which take an average of 45 days to settle a claim, Otonomi’s insurance products adjudicate and settle claims in just 45 minutes. Furthermore, having access to highly reliable and real-time data helps enable Otonomi to more accurately determine delays and calculate the most accurate pricing for its clients based on real-time market fluctuations. Additionally, oracles make it straightforward for Otonomi to add new data points in the future, helping enable Otonomi to seamlessly expand its parametric insurance solutions across new business verticals.