A Self-organized Framework for Insurance Based on Internet of Things and Blockchain

A Self-organized Framework for Insurance
Based on Internet of Things and Blockchain
Monireh Vahdati, Qazvin Branch, Islamic Azad University, Qazvin, Iran
Kamran Gholizadeh HamlAbadi, Qazvin Branch, Islamic Azad University, Qazvin,
Iran
Ali Mohammad Saghiri, AmirKabir University of Technology, Tehran, Iran
Hassan Rashidi, Associate Professor, Allameh Tabataba'i University, Tehran, Iran
The IEEE 6th International Conference on Future Internet of Things and Cloud (FiCloud 2018), 6-8 August 2018, Barcelona, Spain
Athors

Agenda
Introduction
IoT, Blockchain and
Cognitive System
Related works
Recent approaches for IoT, Blockchain
and Cognitive Systems in Companies
and Insurances
The Proposed Model
A Self-Organized framework
for Insurance
A Case Study
Present a case study for
vehicle smart insurance.

Implementation
Implement details of the
proposed framework.
Discussion and Comparison
Discuss and compares the suggested
algorithms with other studies has been
reported
Conclusion and Futures
Research
Describe the conclusion and future
researches
FINISH
About us

Recently, many traditional companies such as insurance companies have been evolved.
IntroductionIoT, Blockchain and CS

Traditional companies
Insurance companies
Traditional algorithm for managing insurance companies has many
Weaknesses
In a traditional insurance companies, both high-risk and low-risk users may
have considered as equal users.
This is because the traditional companies have few devises to characterize the
users considering their risks.
Another drawback of these companies is that the existing algorithms are not
transparent.
The changes in the decision makings in the company are very slow. this means
that their algorithms are not adaptive.
In 2010, peer-to-peer
insurance was first
introduced in the German
insurance market
In 2014, the British
insurance company known
as Guevara introduced the
peer-to-peer insurance
concept for car insurance
In 2016, Huddle Money
was launched in Australia,
initially with a peer-to-peer
model of insurance.
Blockchain , IoT, Cognitive Systems
There is only one work reported in IBM.
This article proposes a self-organizing
framework for insurance based on IoT and
blockchain, which eliminates the main
problems of traditional insurance
companies.
The IEEE 6th International Conference on Future Internet of Things and Cloud (FiCloud 2018), 6-8 August 2018, Barcelona, Spain 05

Recent approaches for designing modern companies focus on IoT and Blockchain technology. utilizing IoT
in insurance domain has some challenges.
Related WorksRecent approaches for IoT, Blockchain and Cognitive Systems

Related Works
Recent approaches for designing modern companies focus on IoT and Blockchain technology
(Nath, 2016)
Utilizing the
blockchain concept in
order to share fraud
intelligence data in
insurance system is
reported
(Lomberti et
al,. 2017)
Blockchain as a
breakthrough
technology has lots of
benefits that can be
represented in
insurance company,
(Raikwar et al,.
2018)
Designing the
distributed platform in
order to support
transaction execution
in insurance process
by using blockchain as
a system service is a
key idea
(Gatteschi et
al., 2018)
The objective of the
work is to support
actors involved in this
decision making
process by illustrating
the capabilities of the
blockchain
technology.
(Zanaj et al.,
2018)
purpose of such
system rises as result
of an evaluation for
the payment systems
of the vehicle
insurance based on
the method we drive
the car.

Related Works
Recent approaches for designing a cognitive frameworks
(Thomas 2007)
Cognitive Network
(Wu et al., 2014)
Cognitive Internet of
Things(CIoT)
(Saghiri and Maybodi
2016)
Cognitive in Peer to Peer
(P2P) Network
(Gholizadeh et al.,
2017)
Cognitive Recommender
Systems in IoT
(Saghiri et al., 2018)
Cognitive Internet of Things
in Blockchain
In this paper, we suggested a framework for self-organized insurance based on cognitive systems, blockchain, and IoT. The suggested
framework can be used as a standard framework for the next generation of insurance companies. note that, a self-organized framework
for insurance companies based on IoT, blockchain technology, and cognitive systems has not been reported.
08

In this section, we present a self-organized framework for insurance based on IoT and blockchain
Technology. We used a cognitive systems.
The Proposed ModelA Self-Organized framework for Insurance

The Proposed Model
Self-Organized framework for Insurance
The structure of the proposed framework is given in Fig. 1. This framework consists of three layers: Requirement Layer, Cognitive Process Layer, and Adaptive
Insurance Layer. In the Adaptive Insurance Layer, the elements of insurance are combined with blockchain technology and IoT. Note that, the combination between IoT
and blockchain technology creates many management problems which should be solved by cognitive systems. In the proposed framework, the cognitive process layer
is in charge of managing the system by solving management problems of the Adaptive Insurance Layer. The details of each layer are given in the rest of this section.
Cognitive Specification Language
Requirement Layer
Cognitive Engine
Cognitive Process Layer
Adaptive Insurance Layer
P2P Manager CryptocurrencyBlockchain Unit Smart Contract
Goal
ObserveAct
10

The Proposed Model
Requirement layer (Cognitive Specification Language (CSL))
11
Insurance Type
Cryptocurrency Type
Smart Contract Type
Actuators Type
Sensor Type
The requirement layer is used to
determine the goal and behavior of the
network.
The language is used to write on a file
called configuration file.
This file is shared among those entities
which manage the configurations of the
Insurance system.
It should be noted that, changing the
goals in the requirements layer leading
to changing the optimizing functions in
the cognitive process layer.
The above elements can be used in commands. The commands can be also used to tune the system. The commands can be fetched from
outside of the framework. Considering distributed nature of IoT for sharing the configuration things the blockchain can be used.
11

The Proposed Model
Adaptive Insurance Layer
This unit has three sub-unit: blockchain of things, blockchain of microservices and blockchain of smart contracts.
For example, the information of smart contracts used by the system are indexed in the blockchain of smart
contracts.
This element facilitates the thing to thing communication and data sharing using peer-to-peer networking
technology.
This element provides the required functions for using the smart contracts defined in the system. Note that, the
codes of smart contracts are stored by the blockchain unit in a blockchain [18]. The cognitive engine is in charge of
tuning and using the smart contract unit considering the goal of the system. All contract related to insurance
company are managed by smart contract unit.
This unit supports the payment process in cooperation with cognitive process layer and other units of the Adaptive
Insurance Layer in the system.
Blockchain Unit
Peer-to-Peer
Communication
Manager Unit
Smart Contract
Cryptocurrency
Manager
12

The Proposed Model
Adaptive Requirement Layer(Cryptocurrency Manager)
Medium Business
Description Reference
(Gatteschi et al., 2018)
(Koning 2016)
(Tata and Sweet, 2017)
(Gatteschi et al., 2018)
(Bitpark White Paper, 2017)
(Etherisc White Paper, 2018)
This cryptocurrency is the first prototype of cryptocurrency
The original design goal of Bitcoin for insurance purpose
Based on Ethereum. Benefits for hidden costs of insurance.
Provide insurance benefits for hidden costs of insurance User
New insurance service with P2P Insurance & Cryptocurrency.
Building a free, open-source, open-access platform for
decentralized insurance.
Cryptocurrency in
Insurance
13
Bitcoin
Fedcoin
Umbrella Coin
Ethereum
Bitpark Coin
Etherisc

The Proposed Model
Cognitive Process Layer
Find the goal of insurance
An engine for finding the goals of the insurance company by
interpreting the configuration file.
Smart Contracts and payment process
Two engines for managing the complexities related to smart
contracts and payment Process.
P2P communication and blockchain
An engine for managing peer-to-peer communication and
blockchain
Characteristics of the users
An engine for predicting the characteristics of the users.
Insurance rate
An engine for predicting the insurance rate
Insurance policies
An engine for generating appropriate insurance policies.
In this layer, the cognitive engine observes the information about insurance and then executes appropriate algorithms for managing the
system. This layer considers the goals of the self-organized insurance that are specified in requirement layer. In this layer several types
of engines may be designated which are described as bellow.
14

The Proposed Model
This is example for a subtitle
15
Because of distributed nature of IoT, the cognitive engine can be implemented using one of the following methods.
In this approach, the cognitive engine is
implemented in one server.
Centralized
Approach
Semi-Centralized
Approach
Full Distributed
Approach
In this approach, the engines of the cognitive
engine are implemented in multiple servers.
In this approach, every thing has its own cognitive engine.
15

we will present a case study for smart insurance vehicle.
A Case Studysmart insurance Vehicle.

02
01
User and Vehicle ID saved
each user and vehicle have an ID
identifier and their information is
saved in system.
The goal is determined
The system goal is determined in
the Requirement Layer.
A Case Study
Smart Insurance Vehicle
17

04
03
Select type of
insurance package
The goal is to select the
type of insurance package
for the customer. The goal
can be set automatically
by the system or manually
by the user.
Goal Entered to
CPL
The goal is entered into
the Cognitive Process
layer and is received by
the Cognitive Engine.
05Received vehicle and user
information
At this point, the vehicle
information and user behavior
information are received by the
third layer and stored in the
Cognitive Engine.
18

the
06
Obtains car insurance
records
Obtains car insurance records
from the Rest APIs of their
responsive insurance
companies.
07
08
Analysis and weighted
The User Behavior Records, Car
Insurance Records and vehicle and
user information factors are weighed
and analyzed on the basis of risk
metrics and then used to select the
insurance package.
Obtains user behavior
records
In order to verify more precisely
the user's behavior, user driving
violations, accident, etc., it is
obtained through the Rest API of
the Police Department.
19

smart insurance Vehicle
0910Created smart contract
This information is analyzed along with vehicle
information, user behavioral information and pricing in the
Cognitive Engine and based on this smart contract
behavior are provided for the user.
Pricing for Insurance
Choosing smart insurance package
and pricing it based on vehicle model
and the distance traveled by the car.
Pricing based on user behavior
records.
11
Provide an intelligence
Insurance Package
Provide an intelligent insurance
package for delivered to user
20

Payment
Through cryptocurrency coins
12
21

In this section, we give the implement details of the proposed framework. At first, some basic concepts are
given, then a mapping used in the implementation domain is described, and finally the mechanisms and
related algorithms are described.
ImplementationImplement details of the proposed framework.

Implementation
Basic concept
Types for execution of the smart contracts Technologies for implementing smart contracts
Installed
in this type, a business logic is used to design
an explicit smart contract.
On-Chain
in this type, smart contract is executed within a
chain code. Source Code of this type pf
contract is defined based on business logic.
A smart contract is a program intended to digitally manage the negotiation or performance of a contract. The execution of a smart
contract can be simple or very complicated.
Smart Contract application engine
in this technology, the engine is designated as
library functions.
Chaincode
in this technology, the smart contact is a program
called chain code.
Transaction Families
In this technology, businesses can pick the level of
versatility and risk that’s right for their network.
23

Implementation
Basic concept
The Hyperledger is reported in (Hyperledger Architecture, Volume 2: Smart Contracts white paper)

Implementation
Basic concept
Since, we selected the Hyperledger Sawtooth in our implementation, its benefits are listed below.
Smart Contract Implementations in Hyperledger Frameworks reported in (Hyperledger Architecture, Volume 2: Smart Contracts white paper)

Implementation
Basic Concept
The stellar network is a distributed payments infrastructure that connects banks, and payment systems. It provides the creating of general wallets, banking tools, smart
contracts, and cryptocurrencies. This network has the following properties: Low Latency, Digital signatures and hash families, Decentralized control and Flexible trust
26
Metrics Bitcoin’s blockchain Ethereum Stellar
Average Transaction
Confirmation Time
1 hour 15 minutes 3 to 5 seconds
Average Transaction
Fees
$18.75 per
transaction
$1.13 per
transaction
$0.01 will pay for
300,000 transaction
Transaction Per
Seconds
3 transaction per
second
7 transaction per
second
3000+ transaction per
second
Consensus
Mechanism
Proof of Work Proof of Work Stellar Consensus
Protocol(SCP)
Protocol comparison is reported in Reddit on January 2018
26

User agent can use credit/debit card to purchase INS-
COIN directly on the insurance website.1
We can be used the stellar network for creating an
INS-COIN Cryptocurrency.2
Any user agent that uses INS-COIN cryptocurrency for
its own payment can include variable discount.3
If the user agent is behaving appropriately, the above
system will reward it with INS-COIN and will charge the
user's INS-COIN.
4
Implementation
Mapping
The agents information has been stored in each blockchain.
INS-COIN is a coin based in insurance. INS-COIN aims at
improving insurance care worldwide and making it affordable
through crowd power.
Obviously, with a history of bad user agent behavior
insurance penalty is calculated based on INS-COIN.5
27

Implementation
Mechanism
Submission Phase
Registration Phase
Data Gathering
Phase
Analyzing Phase
Recommendation
Phase
Contract
Execution Phase
Payment Phase
Self-
Organized
Mechanism

Implementation
Implementation Details
Docker
Implement and maintain a
the proposed framework
on-chain smart contract
we used
Hyperledger
implement the idea
Cognitive systems
we used
Stellar
for defining and managing
INS-COIN
Hyperledger Sawtooth
Is suitable for our work

To the best of our knowledge, our work is novel (unique) and there hasn’t been any prior study on designing
an algorithm based on internet of things, cognitive systems and blockchain technology for Insurance
companies.
Discussion and ComparisonCompares the suggested algorithm with other studies reported in the literature

Discussion and Comparison
Compare with other insurance solutions
Reference Blockchain based IoT Based Cognitive Based
(Jai, 2015) Not Reported  Not Reported
(Mazumdar, 2018)  Not Reported Not Reported
(Nath, 2016)  Not Reported Not Reported
(Gatteschi, 2018)  Not Reported Not Reported
(Chapman, 2015) Not Reported  Not Reported
(Forster, 2017) Not Reported Not Reported 
(Van Der Poorten and Deschryver, 2017 ) Not Reported Not Reported 
(Schwartz, 2016) Not Reported  
(Patra, 2017)   
Our Study   

In this paper, we proposed a self-organized framework for Insurance based on Internet of Things, cognitive
systems, and blockchain technology.
Conclusion and Future Research
Internet of Things, cognitive systems, and blockchain technology

Conclusion and Future Research
Internet of Things, cognitive systems, and blockchain technology
Proposed a Self-
Organized
Framework for
insurance
Presented a
smart insurance
for vehicles.
The proposed
framework was
compared with
other existing
solutions
our work is novel
and there hasn’t
been any prior
study on
designing a self-
organized
Insurance
The proposed
framework can
be merged with
the existing
cryptocurrencies
of peer-to-peer
insurance
For future
research we can
apply the
technologies of
Web of Things in
the proposed
framework.
33

The Authors
Monireh Vahdati
MSc. E-Commerce
Qazvin Branch, Islamic Azad
University. Qazvin, Iran
Blockchain
Internet of Things (IoT)
E-Learning
Kamran Gholizadeh HamlAbadi
MSc. E-Commerce
Qazvin Branch, Islamic Azad University.
Qazvin, Iran
Blockchain
Internet of Things
(IoT)
Recommender Systems
Ali Mohammad Saghiri
Ph.D. Artificial Intelligence
AmirKabir University of Technology,
Tehran, Iran
.
Blockchain
Internet of Things (IoT)
Learning Automata
Hassan Rashidi
Associate Professor, Department of
Mathematics and Computer Science
Allameh Tabataba'i University Tehran, Iran
Software Engineering
Programming Languages
Scheduling Algorithms
34
Recommender System
Near Field Communication
(NFC)
Cognitive Systems
Decision Support Systems
(DSS)

A Self-organized Framework for Insurance Based on Internet of Things and Blockchain

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