KENYA METHODIST UNIVERSITY

SCHOOL OF SCIENCE AND TECHNOLOGY

DEPARTMENT: COMPUTER SCIENCE
UNIT CODE: CISY 411
UNIT TITLE: RESEARCH PROJECT PROPOSAL
RESEARCH TOPIC: DIRECTLINE ASSURANCE COMPANY Dapp SMART CONTRACT
PRESENTED BY: JULIUS ISAAC MBUGUA
REGISTRATION NUMBER: CIS-1-0125-2/2022
SUPERVISOR: MR TIMOTHY ANONDO

Submitted by Julius Isaac Mbugua to Kenya Methodist University in partial fulfillment of the
requirements for the degree In Bachelor of Science in Business Information Technology.

DATE OF SUBMISSION…………………………………
DECLARATION

Declaration by the Candidate

I declare that this research proposal, which is my original work has not been presented for a degree in
any other University. No part of this research may be reproduced without the prior permission from the
author and/or Kenya Methodist University.
Signature Date

Name of Candidate: JULIUS ISAAC MBUGUA

Computer Science Department
Kenya Methodist University

Declaration by the supervisor(s)

This research project proposal has been submitted for examination with our approval as university
supervisors
Name: ………………………………………………
Department: ………………………………………………
Signature: ………………………………………………
Date ………………………………………………
ACKNOWLEDGEMENT

I would like to thank the Almighty God for how far he has brought me during this the research process
and his grace upon my life.
To my parent who financially and emmotionly supported me during the process,
To the lecturers at KeMU who have equipped me with the knowledge to undergo this research and my
suervisor, Mr Timothy Anondo who have ensured the success on this project.
To my friends who have encouraged me and given me helpful advice and knowledge to the best of their
ability during this period.
ABSTRACT
Directline Assurance company since 1998 has being pursuing and has positively impactes the PSV
sector which has been avoided by many companies to provide insurance,innovate their
product ,promptly settling claims and exceeding client expectations in motor vehicle insurance and are
moving beyond motor. They have also inluded classes like Fire, Accident, Theft, Liability, Marine,
Engineering, Miscellaneous , Bundled Products and Digital Products.The proposed Directline
Assurance Company Smart Contract Dapp will be focus in on the motor class which involve the
followin:Motor Private, Motor commercial own good, Motor commercial general carrtage, Motor
Trade, Public Service Vehicles(PSV) and Motor Cycle. The type of users inbthe system will be
Policyholders,Smart contract executers,Validators and IPFS Network Participants

The main problem face by Directline assurance and any other centralize platform is trust. In some cases
claims can take a long process before its validated which can sometimes lead to error since everything
is on paper work. Adding new premiums requre the policy holder to contact the company through
phone which can lead to risk of fraudulent online brokers as policies are mostly signed and processed
by papers which often requires human supervision,same case in registration,one has to physically visit
one of the branches. A decentralized InterPlanetary File System(IPFS- A decentralized and distributed
file system that enables peer-to-peer sharing of content on the internet) for blockchain-based
framework for the auto insurance sector that regulate the activities in terms of insurance claims for
automobile and automates payments.

Objective of the proposed system is to create Directline Assurance Company decentralized system
that involves blockchain,smart comtracts amd IPFS.This will enable the policy holders to automate
aspects like policy Issuance , claim processes ,verification and validation, premium calculations, policy
renewal and updates. Other objectives are to develop a IPFS Intergration module, create an
administrative web interface, to develop a mobile application for front end users.

The approach to be used in developing Directline Assurance Company Dapp will be the Software
Development Life Cycle approach and use the waterfall model methodology. The following activities
will be carried out: Problem Identification, Feasibility study, Project Planning and Management,
Analysis, Design, System development, Integration and System Testing.
Table of Contents
DECLARATION........................................................................................................................................2
Declaration by the Candidate................................................................................................................2
Declaration by the supervisor(s)............................................................................................................2
ACKNOWLEDGEMENT.........................................................................................................................3
ABSTRACT...............................................................................................................................................4
CHAPTER ONE........................................................................................................................................6
Introduction...........................................................................................................................................6
Background Study.................................................................................................................................6
Problem Statement................................................................................................................................7
Justification...........................................................................................................................................9
1.4 OBJECTIVES................................................................................................................................11
1.4.1 General Objectives.................................................................................................................11
1.4.2 Specific Objectives................................................................................................................11
1.5 SCOPE OF STUDY......................................................................................................................11
1.5.1 Database module....................................................................................................................11
1.5.2 Administrator module............................................................................................................11
1.5.3 Finance module......................................................................................................................11
1.5.4 Directline agent module.........................................................................................................12
1.5.5 Policy management module...................................................................................................12
1.5.6 Payment module....................................................................................................................12
1.5.7 Help module..........................................................................................................................12
1.5.8 Search module.......................................................................................................................12
1.5.9 About Us module...................................................................................................................12
1.5.10 Feedback module.................................................................................................................12
1.5.11 Contact Us module...............................................................................................................13
1.5.12 Reports module....................................................................................................................13
CHAPTER TWO.....................................................................................................................................14
LITERATURE REVIEW.........................................................................................................................14
2.0 Introduction...................................................................................................................................14
2.1 Literature Review..........................................................................................................................14
Benefits of Blockchain and Smart Contracts..................................................................................14
Challenges to Implementation........................................................................................................15
Potential Solutions and Future Outlook..........................................................................................16
CHAPTER THREE..................................................................................................................................17
METHODOLOGY...................................................................................................................................17
3.0 Introduction...................................................................................................................................17
3.1 Methodology.................................................................................................................................17
3.1.1 Problem Identification................................................................................................................17
3.1.2 Feasibility Study.........................................................................................................................18
3.1.2.1 Schedule Feasibility................................................................................................................18
3.1.2.2 Operational Feasibility............................................................................................................18
3.1.2.3 Technical Feasibility................................................................................................................18
3.1.2.4 Economic Feasibility...............................................................................................................19
3.1.3 Project Planing And Management..............................................................................................19
 3.1.4 System Analysis.........................................................................................................................19
3.1.5 System Design............................................................................................................................19
3.1.6 System Development..................................................................................................................19
3.1.7 Intergration and System Testing.................................................................................................20
3.2 Project Resources Budget and Schedule.......................................................................................20
3.2.1 Project Resources..................................................................................................................20
3.2.2 Budget....................................................................................................................................21
3.2.3 Project Schedule (Gantt chart)...............................................................................................22
REFERENCES.........................................................................................................................................24

CHAPTER ONE

Introduction
This chapter entails the background study, problem statement, justification, objectives and scope of the
study. It also talks more about the company and its features in the above topics.

Background Study

In today's world, motor vehicle insurance is crucial for protecting individuals and businesses from
financial risks linked with vehicle ownership and operation. Whether it's private cars, commercial
trucks, taxis, or public service vehicles (PSVs), insurance coverage is a necessity.

However, traditional insurance processes for motor vehicles can be complex and time-consuming.
Lengthy paperwork and complicated procedures often make navigating the insurance landscape
difficult for policyholders, leading to delays and frustration.

Recognizing these challenges, DirectLine Assurance is committed to simplifying insurance

management. Through innovation and technology, threy aim to revolutionize the insurance experience,
making it more accessible and customer-centric.

Mission: To exceed customer expectations by providing superior solutions and service underpinned by
a strong digital capability.

Vision: To be the insurer of choice in Kenya and the wider East Africa region.

Opportunity Story: There's a tale of two shoe salesmen sent to explore business opportunities in
Africa. The first reports, "No business opportunity, no one wears shoes." The second sees an immense
opportunity where no one wears shoes.

Similarly, in 1998, Directline saw an opportunity in the PSV sector, an industry others avoided. They
took it as their responsibility to serve and make clients feel cared for. Their tenacity is inspired by
Theodore Roosevelt's words:

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the
doer of deeds could have done them better. The credit belongs to the man who is actually in the
arena…”
This ethos drives their culture. Directline believe in accessible insurance, innovative products, prompt
claims settlement, and exceeding client expectations.

To stay ahead, they invested in a team of world-class insurance professionals and a robust IT
infrastructure. This ensures convenience and efficiency remain their priorities.

Problem Statement

In an ideal situation , Insurance companies should use smart contracts to handle everything from
issuing policies to paying out claims. These programs would also use a secure online storage system
(IPFS) to keep all important documents safe and accessible. This would make everything faster, easier,
and more reliable for both policy holders and the insurance company.
Currently: They rely on a lot of paperwork and manual processes for tasks like:
Issuing policies
Processing claims
Verifying information
Calculating premiums
Renewing policies
These manual processes, often lead to:
Delays - Information needs to be passed through multiple steps, causing slow processing times.
Mistakes - Manual data entry and handling can increase the chance of errors.
Frustration for both customers and insurance companies - Delays and errors can be frustrating for
everyone involved.

Gap : There's a big difference between the ideal way of doing things with smart contracts and IPFS and
how things are done now. Without these technologies, insurance processes are slower, less transparent,
and less satisfying for customers. To fix this, embracing new technologies and improving how motor
insurance works.
The Solution:The proposed online insurance claims system uses blockchain and smart contract
technology to improve traditional claim processes. This approach has several benefits:
Enhanced Security:
 1. Mutual Authentication: The system checks the identities of both the policyholder and the
insurance company using BAN logic proof. This ensures only authorized parties can join the
claims process, building trust and lowering fraud risk.

2. Resistance to Attacks: By using Elliptic Curve Digital Signature Algorithm (ECDSA), the
system secures communication between parties. This keeps sensitive information safe from
unauthorized access or changes during transmission.

3. Traceability: Every data exchange is signed by the sender, allowing the receiver to confirm its
authenticity. This creates a clear record and stops tampering with information during claims
processing.

Streamlined Efficiency:

1. Smart Contracts: The system automates claim settlement rules with smart contracts, cutting
down on manual work and processing time. This speeds up claim resolution and improves the
customer experience.

2. Reduced Costs: Automating claim processing lowers administrative expenses and removes the
need for manual verification. This saves insurance companies money on operations.

Justification

Blockchain technology provides a secure and transparent platform for managing insurance claims. By
leveraging smart contracts and robust security mechanisms, the proposed system streamlines the claims
process, minimizes fraud risks, and enhances overall efficiency for both policyholders and insurance
companies
Additionally, the use of a test IPFS node during allows for secure and controlled testing of the DApp's
interaction with decentralized storage, potentially used for storing claim-related documents.This
solution offers a significant improvement over traditional paper-based and manual claim processes. It
paves the way for a future of secure, efficient, and customer-centric insurance claim management.
The users in the proposed Application will have the following functionalitie:

1. Policyholder:

Types: Individuals with private vehicles, PSV operators, Taxi business owners, Commercial vehicle
owners. Functionalities:

 Get insurance quotes for different coverage options.

 Buy and manage insurance policies (monthly or yearly).
 Access policy details anytime.
 Submit claims directly through the DApp.
 Track claim status and receive updates.
 Make secure payments using integrated methods .
 Upload relevant documents (like driver's license, vehicle registration) to IPFS for secure storage
during claims.

2. DirectLine Agent:

Functionalities:

 Help policyholders with questions and issues.

 Access policyholder details and claim history for support.
 Perform certain insurance tasks within the DApp
 View documents uploaded by policyholders to IPFS (depending on setup)

3. DirectLine Admin:

Functionalities:

 Ensure the DApp runs smoothly.

 Manage user accounts, including permissions for different groups.
 Analyze usage data to improve the DApp.
  Implement and maintain security measures.
 Monitor smart contracts that automate insurance processes.
 Control access to IPFS storage

1.4 OBJECTIVES

1.4.1 General Objectives

o To develop a Decentralized application(Dapp) for Directline Assurance Company

1.4.2 Specific Objectives

o To create a database module for Directline Assurance Company

o To develop an administrator web interface for Directline Assurance Company
o To develop a Dapp for front end users of Directline Assurance Company
o To create a module for generating reports for Directline Assurance Company

1.5 SCOPE OF STUDY

1.5.1 Database module.

It will be able to store users data and transaction history. It will also intergrat IPFS for storage of claim
documents and large files.

1.5.2 Administrator module

This is the module that will enable the systems administrator to approve and disable policy holders
accounts.

1.5.3 Finance module

This will contain transaction history and the hash ID

1.5.4 Directline agent module

This module will allow the agents to update on real -time information about the claims that have been
processed which will automate the smart contract

1.5.5 Policy management module

This module will enable the policyholders to create an account, provide their details and receive all the
services and information from the insurance company.

1.5.6 Payment module

This module will provide a platform where patients will be able to pay for the services offered to them
in the clinic.

1.5.7 Help module

This module will help new users on how to navigate through the system when they are having a hard
time accessing the app.

1.5.8 Search module

This module will provide customers with a search platform to look for specific desired information
without scheming though the whole information in the mobile application.

1.5.9 About Us module

This module will entail the background and history of the Clinic.

1.5.10 Feedback module

This module will be used by patients to give their remarks and also give feedback on the services they
receive from the Clinic.

1.5.11 Contact Us module

This module will enable patients to contact the clinic by sending a message. It will also have contact
information of the clinic and their social media handles.

1.5.12 Reports module

This will be used by the Clinic to generate the reports from database on how the Clinic is fairing on in
the sales and finances of the clinic.

1.5.13 Smart Contract Integration Module

Integrates smart contracts for automating insurance processes such as policy issuance, premium
calculation, and claim settlement.

1.5.14 IPFS Integration Module

Integrates IPFS for decentralized storage of insurance-related documents such as policies, claims, and
verification dataClaims Submission and Processing

1.5.15 Claims Submission and Processing Module

Facilitates the submission of claims by policyholders, tracks claim status, and manages the processing
and settlement of claims by agents and CSRs.

1.5.16 Policyholder

Dashboard Module: Offers policyholders a personalized dashboard to view policy details, track claims,
make payments, and access support services.

1.5.17 Security and Compliance Module Implements robust security measures to protect
user data, transactions, and smart contracts, ensuring compliance with industry regulations
and standards.

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

A literature review is a comprehensive summary of similar projects. This chapter entails an overview of
blockchain and smart contracs revolutionizing the insurance sectors.

2.1 Literature Review

The insurance industry stands at the precipice of a transformative era. Blockchain technology, with its
core principles of decentralization, immutability, and transparency, presents a compelling opportunity
to streamline processes, enhance security, and reduce costs. This literature review dives into the
potential of blockchain and its embedded smart contracts to revolutionize the way insurance operates,
while critically evaluating the challenges that need to be addressed for successful implementation.
Benefits of Blockchain and Smart Contracts
The integration of blockchain and smart contracts offers a multitude of advantages for the insurance
industry, impacting both policyholders and providers. Here's a closer look at some key benefits:
Enhanced Automation and Efficiency: Smart contracts automate various insurance processes,
including client onboarding, policy issuance, claim filing, and adjudication. This eliminates the need
for manual intervention, reduces processing times, and minimizes human error. Studies by Kantur &
Bamuleseyo (2018) highlight how automation through smart contracts expedites claim payments for
policyholders, leading to a more efficient and streamlined claims process.
Reduced Fraud and Increased Transparency: Blockchain technology offers a secure and tamper-
proof ledger for recording all insurance data. This distributed ledger ensures the immutability of data,
making it virtually impossible to alter or manipulate records. This fosters transparency by providing a
clear audit trail for all transactions, deterring fraudulent activities and fostering trust between
policyholders and insurers emphasizes the importance of transparency in building trust within the
insurance ecosystem.
Cost Reduction and Improved Customer Satisfaction: Automation through smart contracts
significantly reduces manual tasks and associated administrative overhead for insurance companies.
This translates to cost savings, allowing insurers to allocate resources more effectively. Additionally,
faster claim settlements and a more streamlined user experience contribute to enhanced customer
satisfaction .
Beyond these core benefits, blockchain technology offers further advantages for specific
insurance segments:
Parametric Insurance: Smart contracts can be programmed to automatically trigger payouts based
on pre-defined parameters, such as weather data for crop insurance or flight cancellation data for travel
insurance. This eliminates the need for traditional claim assessment processes, resulting in faster and
more efficient payouts .
Peer-to-Peer (P2P) Insurance: Blockchain technology can facilitate secure and transparent P2P
insurance models. Smart contracts can automate premium collection, claim processing, and dispute
resolution within these decentralized networks .(A BUSINESS MODEL FOR VEHICLE INSURANCE
BASED ON BLOCKCHAIN SMART-CONTRACTS - Webthesis, n.d.)

Challenges to Implementation
Despite the numerous advantages, widespread adoption of blockchain and smart contracts faces several
challenges:
Technical Limitations: Current blockchain technology grapples with scalability issues. The limited
transaction processing speed compared to traditional payment networks can hinder its applicability for
high-volume insurance operations .
Adoption Barriers: The complexity and novelty of blockchain technology create uncertainty for
insurers evaluating its impact on existing infrastructure. Additionally, overcoming platform
development challenges and ensuring scalability are crucial for widespread adoption (e.g., Habil
Kantur & Charles Bamulese).
Regulatory and Legal Frameworks: The decentralized and autonomous nature of blockchain
technology poses challenges regarding legal oversight and regulatory compliance. The lack of a
comprehensive legal framework for smart contracts and the decentralized nature of blockchain create
uncertainty for insurance companies looking to integrate this technology into their operations.
Additional considerations for successful implementation include:
Standardization: Industry-wide collaboration is crucial for developing standardized protocols and
procedures for integrating blockchain technology into existing insurance ecosystems.
Security Considerations: While inherently secure, blockchain systems are not invulnerable.
Addressing potential security vulnerabilities and establishing robust security protocols within the DApp
environment is essential.
User Education: To ensure successful adoption, educating policyholders and insurance professionals
about the benefits and functionalities of blockchain-based insurance solutions is crucial.(08946213.Pdf,
n.d.)

Potential Solutions and Future Outlook

Researchers and industry leaders are actively exploring solutions to address the challenges hindering
widespread adoption. Here are some promising advancements:
Scalability Solutions: Several emerging blockchain platforms are specifically designed for
scalability, offering faster transaction processing speeds and improved throughput.
Industry Collaboration: Consortiums and working groups are emerging within the insurance
industry to promote collaboration on blockchain adoption. Initiatives like the Blockchain Insurance
Industry Initiative (B3i) are fostering knowledge sharing and developing industry standards (B3i,
2024).
Regulatory Developments: Regulatory bodies are starting to acknowledge the potential of
blockchain technology and are exploring ways to create frameworks that encourage innovation while
mitigating risks. (Automating Vehicle Insurance Process Using Smart Contract and Ethereum |
SpringerLink, n.d.)
CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter contains the research methodology, problem identification, feasibility study, analysis,
design, development, system testing, project resources, budget and schedule and references.

3.1 Methodology

The development of Directline Decentralized application will follow the System Development Life
Cycle (SDLC) approach and use the waterfall model methodology. The following activities will be
carried out: problem identification, feasibility study, project planning and management, analysis,
design, development and system testing.

3.1.1 Problem Identification

Currently at Directline Assurance Company one has to physically register and provide all the necessary
documetation in order to access their premiums and services. With the proposed Dapp it will enable
policyholders to register through it , log in and access the available services they provide

3.1.2 Feasibility Study

To develop the proposed Directline assurance Dapp, I will require resources and time hence feasibility
study was performed to measure how beneficial or practical the development of the system will be.
Some of the feasibility analysis done included:
3.1.2.1 Schedule Feasibility

The development of the mobile application system is a requirement for the degree of Bachelor in
Computer Information Systems in Kenya Methodist University where one has been allocated three
months to complete the project.

3.1.2.2 Operational Feasibility

The users are equipped with mobile phones hence many of them are conversant with the technology
and are comfortable using it hence they will be able to integrate with the system easily.They will also
need to create a wallet since it will involve tokens as a means for purchases.

3.1.2.3 Technical Feasibility

This was done to ensure that the system proposed is appropriate and can be used effectively since the
system requires users to have smart phones which are capable of handling the latest mobile applications
and they should be able to operate the phones with ease.

3.1.2.4 Economic Feasibility

The financial benefits and cost associated with the development of the mobile application was analysed
and taken into account.

3.1.3 Project Planing And Management

The proposed system will be developed by one person using resources such as a laptop within a time
frame of three months. The system will use a project management tool which is called Gannt chart that
will be the guiding tool to ensure the system will be completed within a reasonable amount of time and
utilizes the available resources efficiently.

3.1.4 System Analysis

The proposed system functionality depends on user requirements and the system requirements. It
involves fact gathering and documentation of the user requirements where one will require a smart
phone and internet connection and system requirements which are 2 GB RAM, 8 GB internal storage
and compatibility with Android-based cryptocurrency wallets.

3.1.5 System Design

In this phase the exact details on how the project is going to work are defined. This will expound on:
input design, output design, user interface design and the database. A data flow diagram will be used as
the design tool.

3.1.6 System Development

This phase involves implementing the design through writing of codes using programming languages
and tools. The system is tested using acceptance testing where it ensures that the system meets both the
end user and functional requirements and to determine whether the program code has any bugs.
Debugging is also carried out to identify, analyze and remove bugs.

3.1.7 Intergration and System Testing

This is the last phase where individual programs are integrated and tested as a complete system to
ensure that the software requirements have been met.
3.2 Project Resources Budget and Schedule

3.2.1 Project Resources

Hardware resources
 A laptop running on Linux
 A smartphone for testing the mobile application.
Software resources
 Microsoft word for documentation.
 Microsoft PowerPoint for slide presentation.
 Stable internet connection.
 Ganache: Local blockchain for development and testing of smart contracts.
 Truffle Suite: Development framework for writing, testing, and deploying smart contracts.

 IPFS: Decentralized storage protocol for storing and retrieving documents securely.

 Node.js: Server-side runtime environment for running back-end logic and interacting with IPFS
and blockchain.

 React or Angular: Front-end frameworks for building the DApp's user interface.

 Web3.js: JavaScript library for interacting with Ethereum blockchain and smart contracts.

 MongoDB or PostgreSQL: Databases for storing application data.

 Git: Version control system for managing source code.

 Visual studio code and Remix IDE for programming.

 Zotero for citations.
 Programming Languages: JavaScript, Solidity, HTML/CSS, and other languages for front-end
and back-end development.
3.2.2 Budget

ITEM COST (Ksh)

Printing 500

Binding 300

2 Compact Disks 200

Internet Connectivity 1000

Hosting 1000

Total 3000
3.2.3 Project Schedule (Gantt chart)

Month JAN FEB MARCH APRIL MAY JUNE

Weeks 1 2 3 4 1 2 3 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
Problem
identification
Feasibility Schedule
study Operational
Technical
Economic
System System
analysis requirement
User
requirement
System design ERD
Database
Interface
System Coding
development
Testing
Debugging
Consultation Proposal

Project
Documentatio
n

Presentation Proposal

Final
project
REFERENCES
08946213.pdf. (n.d.). Google Docs. Retrieved March 11, 2024, from

https://drive.google.com/file/d/13orsqwbToj-pLvGMl8lFBifBJWZ_TTh_/view?
usp=embed_facebook

A BUSINESS MODEL FOR VEHICLE INSURANCE BASED ON BLOCKCHAIN SMART-

CONTRACTS - Webthesis. (n.d.). Retrieved March 11, 2024, from

https://webthesis.biblio.polito.it/7727/

Automating Vehicle Insurance Process Using Smart Contract and Ethereum | SpringerLink. (n.d.).

Retrieved March 11, 2024, from https://link.springer.com/chapter/10.1007/978-981-16-8550-

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