Decentralised Insurance on the Algorand Blockchain: A Pilot Study in Automated Efficiency

Abstract

Blockchain holds promise for reshaping insurance operations by enhancing transparency, automation, and trust. However, existing blockchain-based insurance prototypes often face limitations in transaction speed, cost efficiency, and scalability. This pilot study investigates a decentralised insurance platform implemented on the Algorand network, aiming to address these challenges. We focus on parametric insurance for flight delays, leveraging smart contracts and oracles to manage policy issuance, coverage activation, and claims. We conduct both sequential and stochastic simulations to evaluate performance under controlled and realistic transaction patterns. Our results show that average confirmation times drop from tens or hundreds of milliseconds, as seen in previous systems, to as low as 20 ms in sequential tests and approximately 6.60 ms in stochastic scenarios. Moreover, transaction fees remain minimal, improving cost-effectiveness by approx. $99.53 \%$ for claim operations compared to existing studies. The system sustains an average throughput of 44.44 TPS, with faster policy issuance and claims processing than comparable Ethereum-based solutions. These findings suggest that Algorand’s Pure Proof-of-Stake consensus and our architectural approach significantly enhance operational efficiency, supporting the feasibility of largescale decentralised insurance services. While scaling the experiment, exploring complex policies, and refining DAO governance structures are needed, this work provides a solid foundation for real-world adoption. This research supports blockchain-driven transformation in insurance markets and can serve as a step forward in Insurance 4.0.