A Trustable and Secure Usage-Based Insurance Policy Auction Mechanism and Platform Using Blockchain and Smart Contract Technologies

Abstract

This study presents an architectural framework for the blockchain-based usage-based insurance (UBI) policy auction mechanism in the internet of vehicles (IoV) applications. The main objective of this study is to analyze and design the specific blockchain architecture and management considerations for the UBI environment. An auction mechanism is developed for the UBI blockchain platform to enhance consumer trust. The study identifies correlations between driving behaviors and associated risks to determine a driver’s score. A decentralized bidding algorithm is proposed and implemented on a blockchain platform using elliptic curve cryptography and first-price sealed-bid auctions. Additionally, the model incorporates intelligent contract functionality to prevent unauthorized modifications and ensure that insurance prices align with the prevailing market value. An experimental study evaluates the system’s efficacy by expanding the participant pool in the bidding process to identify the winning bidder and is investigated under scenarios where varying numbers of insurance companies submit bids. The experimental results demonstrate that as the number of insurance companies increases exponentially, the temporal overhead incurred by the system exhibits only marginal growth. Moreover, the allocation of bids is accomplished within a significantly abbreviated timeframe. These findings provide evidence that supports the efficiency of the proposed algorithm.