Decentralized AI-Managed Insurance Built on EigenLayer AVS

Summary

Eigensurance is a novel decentralized parametric insurance platform built on the Ethereum blockchain that leverages EigenLayer’s Actively Validated Services (AVS) and large language models (LLMs) to deliver transparent, cost-efficient, fair, and trustless disaster insurance.

Eigensurance’s first target will be wildfire insurance due to the importance of the problem and the ease of verifying wildfire claims.

By tokenizing insurance policies as NFTs and utilizing AI agents for wildfire risk assessment, claims adjudication, and treasury management, Eigensurance can beat traditional insurance models.

Also, by hosting prediction markets for wildfires, Eigensurance gets better at wildfire risk assessment over time, learning from the best human predictors. Human experts are incentivized to contribute their wildfire prediction models because they can get rewarded.

Why Now:

Due to events like wildfires and earthquakes, most home/property insurance companies have left the state of California, leaving millions of people without insurance and putting billions of dollars of property at risk. As a Southern California native, I have seen many friends and family members forced to evacuate or put at risk of wildfire. In fact, there have even been various (small) fires erupting just miles from my house in San Diego throughout the years. For millions of Southern Californians, wildfire insurance is vital but expensive or hard to get.

Components:

1. Smart contract based system ensures transparency. Customers know exactly how their premium is priced and what the payout conditions are.
2. LLMs (inference securely off-chain through Reclaim Protocol zklts) are used to invest collected premiums through DeFi protocols like Aave (to generate profit that can be given to Eigenlayer restakers and operators), provide premium estimates, provide an initial review of claims, etc. LLMs are much cheaper than humans, drastically reducing operating costs.
3. LLM-based Operators review claims
   1. Satellite imagery provided through secure, trustworthy sources like NASA or SkyFi are used to verify disaster claims, like wildfire. News reports and user-provided footage are also reviewed. Potentially, insurance payouts are automatically provided if certain conditions are met. For instance, if the NOAA reports a Category 3 Hurricane within 50 miles of your house, you receive 50 ETH.