Much hope was placed in blockchain revolutionizing or disrupting the insurance industry. The paper “BlockChain Technology Beyond Bitcoin” (Crosby et al., 2016) named insurance as one promising novel application for blockchain technology, mainly focusing on the advantages in traceability.
Industry reports also mentioned the possibilities associated with KYC processes, smart contracts, Fraud dedication and peer2peer insurance (PWC, 2017).
However, research shows that trust in blockchain investment still has not recovered from the crypto crash in 2022, even though bitcoin has once again started to climb to new heights. The report Crypto and Blockchain Venture Capital – Q2 2025 (Galaxy, 2025) shows that compared to its peak in 2022 at almost 12bn USD per quarter the VC investment has dropped to about 2bn USD in Q2 2025.
One of the most promising fields for new challengers who wish to leverage blockchain is parametric insurance. As opposed to traditional insurance, which covers the actual loss the insured has suffered, parametric insurance instead pays out a predefined amount if a trigger event happens during the coverage period. This allows lean blockchain-based tech start-ups to avoid the costly and personnel intensive claims adjustment process.
Etherisc: A case study
One example for such a company is Etherisc. They are not a traditional insurance provider, but rather seek to enable decentralized insurance. While they also offer depeg insurance for USD stable coins, this is not unique. More interestingly, they offered crop protection insurance and flight delay insurance, which is an important milestone in connecting crypto with the real world.
The company offers a distinct service. It provides a solution for insurance providers who seek to bring their solutions for parametric insurance on the blockchain.
Then customers are able to buy these insurance contracts with USDC. Payout is based on smart contracts. Coverage, premium payments, claims and payouts are all securely stored on the blockchain. This works well because for the offered risks claims are verifiable based on publicly available trustworthy data (e.g. a traindelay can easily be tracked online).
Additionally, people may invest their cryptocurrency to provide capital for insurance funds and receive returns.
Outlook & Limitations
As the technology has matured in recent years, we also might see more wide scale adoption in incumbents. An industry report from Boston Consulting Group assesses that insurers are now ready to further integrate this technology and can profit from increased efficiency and better processes (Bejarano et al., 2023) .
However, there are also arguments for a more cautious view. Hype has shifted to AI and for many insured risks trigger data is not easily available. Thus, the loss event must be manually assessed, so many advantages of zero-trust smart contracts erode. The functionality of blockchain–based parametric products is also replicable with traditional infrastructure.
The Geneva Association states “DeFi/blockchain insurance remains a niche that has not yet driven major growth of the insurance market nor significantly improved financial inclusion in insurance.” (2023, p. 37), though they highlight long term opportunities.
Sources
Bejarano, F., Mazón, S., Pastoriza, A., Esteban, J., & Salgado, M. (2023). Insurance Is Ready to Leap Forward with Blockchain and the Metaverse.
Crosby, M., Nachiappan, Pattanayak, P., Verma, S., & Kalyanaraman, V. (2016). BlockChain Technology: Beyond Bitcoin. 2.
Galaxy. (2025). Crypto & Blockchain Venture Capital—Q1 2025. Galaxy. https://www.galaxy.com/insights/research/crypto-venture-capital-q1-2025
Geneva Association. (2023). Assessing the Potential of Decentralised Finance and Blockchain Technology in Insurance.
PWC. (2017). Blockchain, a catalyst for new approaches in insurance.
