How Somnia Data Streams Will Transform the Insurance Industry

The concept of insurance is amazing, but in practice, it’s one of the most unpopular institutions that we have in society because it’s become such a bureaucratic nightmare to deal with. There are also way too many situations where people don’t get the coverage they pay for when they need it the most.

Traditional insurance companies use a claims model that hasn’t really changed since the 1800s. When a claim is filed, the insurance company representatives investigate whether the claim is valid, often involving lawyers to dispute the charges. Somnia Data Streams could radically change this dynamic by enabling insurance products that trigger and pay automatically based on verifiable onchain events with no corporate middlemen.

The technology that enables these capabilities is Somnia’s Data Streams infrastructure, which allows applications to subscribe to real-time event feeds instead of constantly polling the blockchain for updates. When combined with Somnia’s processing capacity of over one million transactions per second and sub-cent fees, insurance products gain the ability to respond to real-world events as they happen, at scale, without the overhead that makes traditional insurance expensive and slow to execute.

Here are just a few basic use-cases that we see taking form after the onchain launch of Data Streams.

Flight Delay Insurance That Actually Works

Somnia Data Streams enables a completely different model of flight insurance that becomes invisible and automatic. When travelers buy tickets, they can add insurance at checkout and the smart contract will immediately subscribe to flight status feeds from multiple sources. Then the payout structure could respond proportionally to any delays that might happen.

When flights are delayed by more than 30 minutes, passengers could automatically receive $50 in their wallets. Delays over 2 hours could trigger a higher payment of $200, while complete cancellations might result in full ticket refunds plus additional compensation. The payment arrives while passengers are still sitting in airport lounges, without any forms or claims process.

Crop Insurance for Individual Farmers

Modern agriculture operates within increasingly unpredictable weather patterns due to the earth’s changing climate. Late freezes can destroy entire orchards’ annual income, droughts can eliminate grain harvests, and excessive rainfall can cause crops to rot in fields before harvest. Traditional crop insurance requires extensive documentation, yield verification, and claims processing that can stretch for months. These delays often mean payments arrive too late to help farmers survive until the next growing season, forcing many into bankruptcy despite having insurance coverage.

Somnia’s infrastructure enables granular crop coverage that automatically responds to local conditions specific to individual farms. A wheat farmer in Kansas can purchase drought insurance that triggers based on rainfall data from weather stations within 10 miles of their actual fields. Smart contracts could subscribe to data feeds from national and private weather services, and IoT soil moisture sensors that farmers place directly on their land.

Instant Earthquake Insurance for Homeowners

Earthquake insurance in seismically active regions is notoriously expensive and complicated. California homeowners typically face deductibles of 15% of their home’s value, meaning an $800,000 home carries a $120,000 deductible before insurance coverage even begins. When earthquakes do strike, claims processing takes months while families live in damaged homes or pay for temporary housing out of pocket, waiting for insurance companies to complete their investigations.

Somnia-powered earthquake insurance would improve this model through real-time response to seismic events. Insurance contracts subscribe to seismic monitoring networks, structural sensor grids, and damage assessment feeds from multiple sources.

When an earthquake above 5.0 magnitude strikes within 50 miles of an insured property, the smart contract immediately releases emergency funds of $5,000 for temporary housing. This payment requires no action from the policyholder and arrives within minutes of the seismic event. As additional damage assessment data flows in from various sources, the insurance contract triggers graduated payouts based on actual conditions.

Shipping Insurance That Tracks Every Package

Shipping insurance rarely works out like we expect to. When something is lost in transit, the insurance is not automatic, and it is often never paid out at all. Customers will always face an uphill battle proving damage or loss when problems occur. Claims require extensive evidence with photos and other forms of documentation. The process usually ends with partial payouts arriving months after the initial incident, long after customers needed the compensation.

Somnia-powered shipping insurance could pay out as soon as the item is lost or damaged.

Merchants could seamlessly integrate insurance directly into their shipping options at checkout. Free shipping might include basic coverage for damage and loss, while priority shipping could incorporate comprehensive protection with additional monitoring. The automation eliminates claims processing overhead, allowing damaged goods to trigger automatic reorders and lost packages to initiate immediate refunds.

Gig Worker Income Protection

Gig economy workers face income volatility that traditional insurance can’t address. For example, rideshare drivers can lose days of income if they have a car problem or face an injury. In these cases the workers often live paycheck-to-paycheck, the speed of the payouts will be especially important.

Somnia enables micro-duration income insurance that gig workers can activate by the day or week. A Lyft driver would buy coverage each morning for a small amount that triggers if their daily earnings fall below historical averages. Smart contracts could subscribe to gig platform APIs, tracking actual earnings in real-time.

If the driver usually makes $200 on Fridays but only earns $100 due to low demand, insurance could cover the difference depending on how much they paid forward. If their car breaks down mid-shift, coverage activates based on expected lost earnings. The premiums might be just $5-10 per day, affordable from daily earnings.

For delivery workers, weather-based coverage could compensate for lost income during storms when delivery demand drops. Coverage triggers based on precipitation data and historical order volumes. Workers get protected from circumstances beyond their control without long-term insurance commitments.

What Will The Builders Dream Up?

When a new blockchain feature like this is made available, it’s often unpredictable what builders will come up with. Of course, there are always some obvious use-cases, like the ones that we have laid out, but the hive mind of humanity is unmatched, and will often create things that nobody ever imagined, and that’s what we’re most excited about. We can’t wait to see how builders will leverage these new abilities to make business easier and lives better for people around the world.

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