As the crypto market continues to grow, so do the risks associated with it. Recent events, such as Solana’s outage, have highlighted the need for insurance solutions that can protect investors from losses caused by network disruptions. In this post, we’ll explore how parametric insurance can help mitigate these risks and provide peace of mind for insurance executives.

Introduction

The recent outage of Solana’s blockchain network has caused concern among investors, with crypto investment products related to the network seeing outflows of $3 million during the past week. This highlights the need for insurance solutions that can protect investors from losses caused by network disruptions. Parametric insurance is a type of insurance that pays out when a specific event occurs, such as a network outage, and can help mitigate these risks.

According to a recent report by CoinShares, other digital asset investment products saw inflows totaling $598 million for the fourth consecutive week, bringing the year-to-date flow for these investment vehicles to $5.7 billion. However, the recent outage of Solana’s network has likely impacted sentiment, leading to outflows of $3 million.

How Parametric Insurance Works

Parametric insurance is a type of insurance that pays out when a specific event occurs, such as a network outage. It differs from traditional insurance in that it does not require a claims process, as the payout is triggered automatically when the event occurs. This makes it a faster and more efficient way to provide coverage for events that are difficult to predict, such as network outages.

With Riskwolf, insurers can turn real-time data into insurance. Using unique real-time data and dynamic risk modelling, we enable insurers to build and operate parametric insurance at scale. Simple. Reliable. Fast. This means that insurance executives can have peace of mind knowing that their investments are protected in the event of a network outage.

Steps to Implement Parametric Insurance

1. Identify the risks: The first step in implementing parametric insurance is to identify the risks associated with your investments. This includes network outages, hacks, and other events that could cause losses.

2. Define the parameters: Once you have identified the risks, you need to define the parameters for the insurance policy. This includes the trigger event, the payout amount, and the time frame for the payout.

3. Collect real-time data: To ensure that the insurance policy is triggered accurately, you need to collect real-time data on the parameters you have defined. This includes data on network uptime, transaction volume, and other relevant metrics.

4. Build the insurance policy: Using the real-time data you have collected, you can build the insurance policy. This includes setting the premium, the payout amount, and the terms and conditions of the policy.

5. Monitor and adjust: Once the policy is in place, you need to monitor it regularly to ensure that it is working as intended. This includes adjusting the parameters and payout amounts as needed to ensure that the policy remains effective.

Conclusion

As the crypto market continues to grow, so do the risks associated with it. Recent events, such as Solana’s outage, have highlighted the need for insurance solutions that can protect investors from losses caused by network disruptions. Parametric insurance is a fast and efficient way to provide coverage for events that are difficult to predict, such as network outages. With Riskwolf, insurance executives can have peace of mind knowing that their investments are protected. To learn more about how Riskwolf can help you build and operate parametric insurance at scale, visit our website.