Supply chain insurance cost reduction is now inevitable

Olam use case #38 out of 953

As far as the supply-chain insurance market is concerned, better logistics optimization means more available information, lending itself to an improved ability for insurers to better forecast activity and calculate risks more accurately. Moreover the increase in transparency enables supply chain insurers to calculate the legitimacy of claims effectively.

The high volume of hands, entities and custodies involved in any given supply chain means that at any point obstacles can arise impacting both costs and delivery times.

Insurance-wise, every change of custody is a chance for things to go wrong (for example goods becoming damaged). And with so many involved parties, who is to blame, at what stage? How can a link in the chain confirm the condition of a shipment?

They can all be at fault. More often than not however, certain steps in the chain are associated with specific types of liability (e.g., poor quality control at the manufacturing stage, or poor climate control during the warehousing stage), and insurers need to take all these and more into account when calculating risk. And still, today these insurers end up paying for product waste, which is why their quotes are so high.

Fortunately, blockchain technology can make the task much more feasible: The imminent reduction of risks such as stolen and lost goods, and the sharp rise in data to be available for insurance providers, will lead to much lower costs as insurance companies will now be able to better calculate risk and give much lower bids to their potential clients. Also, making the supply chains more efficient and transparent by making relevant information available to all the stakeholders directly reduces the risk of waste and, subsequently, reduce the number of claims each year and the quotes given for them.

Olam Foundation is launching the only truly neutral, open-source logistics IT platform, supporting both legacy paperwork and future smart-contract-based transactions as part of its global logistics ecosystem.

To learn more about the Olam Foundation, its vision, and it’s token generation event, join us on Telegram or reddit! The project’s whitepaper and proof of concept (in real-time) can be accessed via the website http://olam-platform.org.