Law firm Clyde & Co has launched an off-the-shelf connected parametric insurance contract for use by insurers through its smart contract consultancy, Clyde Code.
In a statement, the firm said that the contract was 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 unfavorable 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 said that it will use this model to build other bespoke or off-the-shelf connected contracts for clients.
Mr. Bacon added, “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 realize the potential of smart contracts.”
The use of parametric products is on the rise in the insurance sector and they 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.
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Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].