smart contract

A smart contract is a self-executing digital agreement whose terms are written into computer code and usually stored on a blockchain or other distributed ledger. As long as predefined conditions are met, the code automatically performs the required action without the need for manual processing or third-party intervention. Examples include transferring funds, recording ownership, verifying compliance, or triggering a payment. In an insurance context, smart contracts may be used to automate parts of underwriting, policy administration, parametric claim payments, reinsurance transactions, or other data-driven processes. While smart contracts generally improve the speed, consistency, and transparency of such transactions, they may also create risks related to legal and coding errors, cyber security, data accuracy, and regulatory treatment.