Abstract
Could we rely on credit swap hedging as a substitute for insurer blockchain technology involvement? This paper is to develop a two-stage contingent claim model to answer the question. We have three main results. First, blockchain helps the policyholder protection when blockchain involvement is relatively large-scale, helps the insurer's survival probability when blockchain involvement is relatively small-scale and helps enable greater efficiency. Second, credit swap hedging adversely affects policyholder protection and increases a higher likelihood of insurer survival. The life insurance company could regard credit swap hedging as a strategic substitute for blockchain involvement. Third, capital regulation makes the insurer more prone to blockchain involvement, thereby accelerating the transformation of the insurance system.
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