Smart Mutual Peer-to-Peer Insurance Contract and its Claim Fraud Avoidance Mechanism Based on Blockchain

A smart mutual peer-to-peer insurance contract is a financial innovation that combines blockchain technology and a mutual insurance contract. This paper constructs a three-stage game theory model of the mutual insurance platform. The role of blockchain technology in solving the claim fraud problem in smart mutual insurance contracts is analysed accordingly. The advantages and disadvantages are also analysed in comparison with the traditional commercial insurance contract. The results show that the reduction of claim audit cost creates a lower fraud probability. They show lower equilibria premiums in blockchain-based mutual insurance contracts because of the transparency of information. The results also show a wider underwriting set of risks because of wealth relocation from the fraud avoidance savings in the blockchain-based mutual insurance contract