A version of this article was originally published by Law360 on Oct. 21, 2020.
Depending on whom you ask, the promise of smart contracts ranges from the mundane to the fantastic—from helping to “facilitate, verify, execute and enforce the terms of a commercial agreement”[i] to ushering in the end of contract law by providing a technological alternative to the legal system.[ii] Smart contracts have already been used in connection with real estate transactions,[iii] bank bonds,[iv] interbank transfers,[v] invoice financing,[vi] and homeowners, renters, pet, and flight-delay insurance.[vii] B3i Services AG, an insurance startup owned by 20 of the world’s largest insurers and reinsurers,[viii] released an application that uses smart contracts to allow participants to “negotiate terms, agree on rates and complete contract placements.”[ix] By February 2020, nine insurers, four major brokerage firms, and eight reinsurers had concluded 30 reinsurance contracts through the application, including, according to B3i, “some of the world’s most complex Catastrophe Excess of Loss (XoL) reinsurance treaties.”[x]