For today’s episode we are going to Paris with Laurent Benichou, director of R&D at AXA. Laurent will introduce a famous blockchain case study called Fizzy, AXA’s blockchain flight delay insurance policy.

Blockchain in two minutes A blockchain is a fully distributed database. This means it has no single point of failure and no central managing authority.

Blockchain’s technical characteristics, such as its immutability and cryptographic verification, create numerous convenient features including fast and easy payments, smart contracts and the ability to indefinitely store information.

Fizzy Fizzy is a fully automated flight delay insurance policy that runs on the Ethereum blockchain and allows customers to get indemnified as soon as they arrive to their destination. The process is fully automated, with a smart contract deciding whether customers are eligible for indemnification. This means no action is required by eligible customers to claim their indemnity.

AXA fully supported Laurent’s idea. Deploying Fizzy, which began development in late 2015, was easy from an internal point of view. This is because AXA is aware of customer pain points regarding flight delay insurance:

Coverage exclusions reduce customer satisfaction as they can lead to cases where the policyholder is unaware whether they are covered or not. Customers do not know when they will be compensated. Customers have to provide proof of delay. This is a cumbersome process involving contacting the airline to provide proof and sending it over to the insurer.

AXA was excited to create a product that efficiently deals with these challenges. Fizzy is very transparent with no claim forms, proof of delay or other paperwork involved. These issues are all automatically dealt by Fizzy, which notifies the customer that the policy has been purchased successfully, that it is stored on the blockchain and that compensation has been completed. In that way, AXA tries to create trust between itself and its policyholders.

If you would like to find out more about the process behind launching Fizzy, Laurent has written a blog post which you can find here.

Fizzy’s value proposition Fizzy’s value proposition for AXA revolves around rebuilding trust in the insurance system.

1. Customer-centricity Despite AXA being a party to the transaction, Fizzy will reinforce trust by ensuring total transparency in making policy payouts. As Laurent puts it, “it’s not the insurer, it’s the smart contract on the blockchain” that will decide whether the policyholder is eligible for indemnification. This means that unlike traditional flight delay policies, where not every eligible policyholder asks for their indemnity due to the cumbersome process, Fizzy guarantees that every eligible policyholder will be compensated. Laurent is confident that customers will be willing to pay more for that guarantee, a necessary condition as paying every eligible customer  means the price will need to be adjusted to retain margins. Having said that, Laurent is keeping the same margin for Fizzy as for other products (and perhaps even a lower margin for the first years). Fizzy is more about increasing customer-centricity than directly improving AXA’s profit line. In that way, AXA can build trust between themselves and their customers.

We cannot but notice how both Laurent and Stefan from Etherisc (which we covered in a previous episode and provides its own flight delay blockchain product) stress the importance of customer-centricity and using blockchain to rebuild trust in the insurance industry.

If you want to find out more about blockchain’s potential to create trust, you should check out our episode (Blockchain vs. the Insurance Trust Deficit) on blockchain and the insurance trust deficit.

1. Learning exercise

Another benefit of Fizzy is that it helped AXA better understand blockchain. Laurent tells us launching Fizzy helped the team develop a bette...