Lloyd’s is keen to explore the potential for smart contracts after a study it undertook suggested the technology could increase efficiency and add value for customers.

The technology reduces the time taken to deliver policies to customers and it can perform various insurance processes such as risk placement, premium payment, warranty enforcement, and claims assessment and settlement, the study shows.

“While smart contracts are a nascent technology, they offer exciting potential to transform the customer experience and it’s something we are looking to develop at Lloyd’s,” Head of Innovation Trevor Maynard said.

Smart contracts comprise computer code designed to start executing tasks automatically in response to external triggers such as receiving storm or flood data.

The joint study with the Centre for Commercial Law Studies says smart contracts could be employed in cargo, contingency and aviation, agriculture and property catastrophe classes.

A separate Lloyd’s report on parametric insurance says policies based on pre-agreed parameters benefit the industry.

“Because policies are based on definitive information such as previous loss events and independently verified data, insurers have more scope to design products for risks that could otherwise be uninsurable or underinsured,” Lloyd’s says.