What if blockchain technology became so effective that insurance agencies required fewer humans top operate? It’s a classic “rise of the machines” scenario, but insurance professionals shouldn’t worry about extinction just yet.
They should be more concerned about savings from blockchain-assisted processes — this is the future of the insurance industry. Private ledgers and smart contracts will enable sharing between insurers and customers as never before. It will be hard to argue with proven efficiency and savings.
Some believe blockchain’s automation could open the door to entirely new types of insurance policies. Short-term and pay-as-you-go policies could be a safety net for poorer populations. Automating policy creation and maintenance could keep costs lower.
As blockchain regulation evolves, automated compliance tools will emerge. Compliance is critical in insurance, and outsourcing it to machines and algorithms only makes sense — humans can then put their time towards solving more pressing problems..
Then there’s the looming question: could blockchain be the beginning of the end for human-administered insurance?
Potential obsolescence isn’t a reason to shun the blockchain. The potential savings are too good to pass up.
Here’s what the experts have to say.
1. Christopher McDaniel, President of RiskStream Collaborative
“Through the advent of a common global framework for blockchain, we will see the creation of a common universal data layer for sharing information between insurance entities. Once we see the adoption of the common shared blockchain framework, there will be a shift to creating interfaces to bring data into the framework from sources such as telematics and IoT. Through the advent of the common framework, we will see an opportunity for creating advanced predictive analytics, machine learning and AI.”
2. Dr. Marcus Schmalbach, CEO at Ryskex
“This depends on many factors. First and foremost, the blockchain has to create its final breakthrough and establish itself. Out of the labs into the operating procedure. Existing blockchain-based solutions must be made scalable and either save costs or generate new business. As soon as this is the case, the insurance industry will experience a renaissance. Otherwise, the blockchain will disappear into the drawers for an indefinite time. I personally believe in the former, because I have seen many good business models that justify the use of blockchain in the long run.”
3. Ryan Brubaker, CIO at Seven Corners Inc
“The future remains promising for blockchain in insurance, but that future remains a decade away. Initially, it will start as attestation of a person, such as a digital ID card that is blockchain validated. Next will be the idea of blockchain-based medical records that are used for underwriting purposes. Eventually, we will start experimenting with the idea of using blockchain to create loss funds, pooling investor money as a sort of crowd-sourced insurance carrier. This idea is being floated right now as marketing hype, but depending on future regulation and the perceived trustworthiness of blockchain, this could someday become a reality.”
4. Dr Mervyn Maistry, Founder and CEO of Konfidio
“Blockchain will be used in combination with artificial intelligence techniques to revolutionize the industry’s offerings with parametric, short-term, and pay-as-you-use insurance policies. Thanks to smart contracts, insurance companies will be able to propose customizable insurance products that fit the customer’s individual needs. Claim reporting will become completely digital and compensation almost instantaneous.”
5. Thiru Sivasubramanian, VP of Architecture & Technology Strategy at SE2
“Carriers see the value of blockchain in enhanced customer experience throughout the lifecycle of a policy; so, I would say the future is bright. They agree on areas where blockchain could be tremendously helpful, and some large carriers are making investments in the technology and coming together in LIMRA to build business cases. As the challenges are addressed, we’ll start seeing wider adoption.”
6. Hugh Karp, Founder of Nexus Mutual
“For me, most of the blockchain projects in insurance that exist today miss the main part of the story, they focus on expense savings and miss the fundamental shift the technology can enable. Blockchain can replace the insurance company with code and allow people to coordinate risk sharing themselves, for the benefit of each other.
Blockchain can be used to create a massively scalable cooperative or mutual that can compete with the behemoths of the industry. Cost savings are part of the story, but they're the boring part that you don't actually need a blockchain for.”
7. Stan Nazarenko, CEO of Piprate
“Permissioned (private) ledgers will dominate the blockchain landscape in insurance in the observable future. In order to maximise value, these ledgers will be integrated into the client data sources and systems to provide the most up-to-date information, rather than being independent, insurance-only solutions.
Over time, as a heavily regulated industry, insurance will benefit from blockchain-enabled regulatory and compliance solutions. However, it won't happen until we address the fundamental building blocks, such as data transfer and interoperability.”
8. Edgar Fernandez, Co-Founder of EOS Costa Rica
“The future of insurance is powered by a blockchain. We see the emergence of Decentralized Autonomous Corporations (DAC) that can to price risk through AI Oracles, transfer risk through a P2P model, invest funds following a rules-based approach and payout claims all without human interaction.”
9. James Song, Team Lead at Shadow Foundry
“In the long-term, large, established insurance companies will be replaced by blockchain-first insurance companies, which will drive prices so low that price comparison shopping won't be necessary at the retail level. We'll be able to implement all kinds of insurance products – things we think are impossible today – like auto insurance, marine insurance, and even health insurance. And the process will be seamless: when something happens, the technology will already know and have started making you whole again.”
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