Blockchain is getting more traction in the business press, but implementation still seems to have remained in the IT domain. However, applications relying on Blockchain technology are emerging in the insurance domain. In addition, third parties are providing entry points for insurance professionals to understand and drive Blockchain applications. Are you part of these developments?
Blockchain and Insurance
Of all the new technologies, Blockchain is among the geekiest. Most discussions include ‘distributed ledgers’, ‘cypto-currencies’, ‘bitcoin’, etc.
And, for folks who will be implementing the technologies, these are important to understand. However, while writing a post on the blockchain a few years ago, I came across a simple description from Peter Diamandis, Executive Director of Singularity University: Blockchain is “a protocol that allows for secure, direct (without a middleman), digital transfers of value and assets (think money, contracts, stocks, IP).”
When I thought about it, there are few transactions in the insurance ecosystem that would not benefit from the use of such a service.
And that is a blessing …
Writing in Insurance Journal, Joseph Harrington, a Chicago-area business writer and communications specialist, provides examples of use cases for ‘Blockchain’ from several insurance practitioners and suppliers.
- Use of ‘smart contracts’ which can ‘execute payments with little or no human involvement.’
- reduction or elimination of centralized databases;
- inherent security that is generally safer than database technology
- global identity, protected by encryption, which can be made available to individuals and organizations
These functions are ideal for new insurance forms – such as ‘microinsurance’ – and could facilitate other developing programs that would not be feasible in the current environment
But there is something of a curse …
All that said, Harrington provides a general caveat that relates back to early Internet days:
Twenty years ago, people who thought that the Internet would completely transform business processes would have been right, but they could also have lost a lot of money investing in “dot com” enterprises that failed.
Harrington references Angus Champion de Crespigny, blockchain strategy leader for EY, who says that there are new applications being developed that are ideal for Blockchain, but would require a learning curve for implementors.
“A lot of the concerns we hear now are what we heard about the Internet in the 1990s,” Champion de Crespigny said. “That didn’t mean the Internet was worthless, it just wasn’t ready for certain functions.”
Is this stalemate?
But there are organizations that are addressing these issues. For example, I had the privilege of auditing a 4 week Blockchain program put on by Cookhouse Lab in Toronto.
How it works…
Cookhouse Lab focuses on insurance. At a basic level, Cookhouse provides collaborative space for individual organizations. In addition, the staff develops projects and invites insurers to join.
In this project, there were 9 attendees from the outside (insurers and suppliers), 4 internal facilitators, and invited guests/speakers.
The first two weeks focussed on understanding Blockchain and the pain points that can be addressed. The last two weeks honed in on developing business cases and developing selection methodology.
The final result was ranking and selecting the top 3 business cases.
The result …
There were three use case categories:
- Automated Insurance Products / Claims Payments
- Communications and Integration
- Industry Wide Blockchain applications
There were two use cases within each of these categories. Each use case had with sufficient detail (developed by the attendees) to project costs and estimated returns.
The final report also aggregated information that was brought to the table by the facilitators and presenters as well as the participating organizations.
What are the takeaways?
Blockchain is still quite geeky, and for good reason. It is powerful and there are significant implementations that rely on the power of the tool. On this basis, we should be seeing a movement towards Blockchain with some new tools to allow user access.
What do you think?