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If there is a major thing and foundation that risk management generally have been thriving on, I will say it is insurance. What do I mean by that? There are several opportunities that insurance offers when it comes to the world of risk management and one of them is financial security or what I will say financial protection rather. The truth is we can not predict tomorrow and so to avoid the future calamity, insurance offers to us financial security for the future.

But even with the advantages that insurance offers, for many years, we have been working with the centralised insurance system which comes with its own massive drawback and challenges. Examples like the centralised authority controlling the policy of the insurance system, the issues for claiming processes and many more. And that is where the Blockchain technology comes into picture.
Nowadays, we are having a Decentralised insurance protocols and it work in a way whereby it is solving the challenges and drawback that the Centralized insurance system have been having for years.

Before even going deeper to the post for today, let me briefly talk about the Decentralised Insurance Protocols and generally how it works. Of course just like the name is, Decentralised insurance protocols works with a Decentralised system and that was possible because of the Blockchain technology. And because it is built on the Blockchain technology, it works with the smart contracts so that those insurance processes can be fast-tracked as that is different from the centralised insurance system that is controlled by centralised authority alone.

There are some key features that Decentralised insurance protocols have which makes it to stand out and which I actually want to talk about. The first is the smart contracts just like I said. The fact that it works on smart contracts which helps to carry out a lot of processes on the Blockchain automatically makes it stand out. Not only that, it also works with the Decentralised governance system whereby it is the community that determine or decide processes and development as compared to the centralised authority controlling it. Lastly is the aspect of transparency and Immutability nature of the Decentralised insurance protocol.

I was saying at the beginning of my post that Insurance plays a major role in risk management. Now I will be discussing how Decentralised Insurance helps to mitigates risk. The first and foremost is making use of the automation system in the claims processing. I will explain better. The fact that it runs making use of smart contracts, it makes things so easy in such a way that every processes are verified before it is been carried out which helps to avoid issues like delays or disputes.

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The second way is that Decentralised Insurance Protocol also helps to reduce fraud. Generally, the fact that Blockchain is transparent in nature helps to go a long way to solve issues like fraud because every transactions that is carried out is so transparent for everyone to see and so It even encourages trust and accountability also. Also, Decentralised insurance protocol helps to lower costs in such a way that some key functions are automated because of the smart contracts and so helps to remove middlemen and generally centralised authority that might want to increase the cost.

When it comes to Decentralised Insurance Protocol, we have started having a lot of platforms embracing it. Examples like the Nexus Mutual which work to insure funds in case if there is anything called smart contracts failure. We also have examples like the Etherisc which in its own case helps to work in the aspect of agriculture farming insurance and even air flights insurance. Then we also have examples like the InsurAce. In this case, they are not really popular but they also work as a Decentralised insurance platform out there.

Even though Decentralised Insurance Protocols have a lot of advantages to offer which some of them I have discussed above in this post, I must confess that there are still some challenges and limitations that Decentralised Insurance Protocols are currently facing which I believe needs to be looked into. The first is the regulatory Uncertainty. Well I will say this particular is associated because of the Blockchain nature.

Then there are issues also like the Adoption Barriers, we have the Data Accuracy also and the scalability issue and many more. But I actually have no doubt that even though there might be challenges, limitations right now associated to Decentralised Insurance Protocols, it is just a matter of time, it will definitely be settled in due time.

As I conclude, you will agree with me that one of the future that we have in our hand right now is the Decentralised Insurance Protocols and whether we like it or not, it will dominate the world of finance around positively. It is just a matter of time actually.