Most industries aren’t making use of blockchain yet, but insurance was a quick adopter here.
These businesses have been steadily implementing blockchain technology as a cost-saving measure. Following the lead of the fintech sector, large insurance companies are testing how blockchain-powered automation can cut their administrative costs. These applications, such as automated payments, are moving from experimentation into implementation.
The blockchain is being fashioned for other insurance-specific purposes beyond automating payments. The distributed aspect of blockchain ledgers could prove useful for multi-party viewing of prospective policies. By providing a secure, remotely accessible ledger, blockchain could reduce the number of interactions required for each insurance transaction.
Cutting administrative costs through automation and remote access is the primary use for blockchain in insurance — for now, at least.
Here’s what the experts say about the state of blockchain in insurance.
1. Christopher McDaniel, President of RiskStream Collaborative
“The insurance [industry’s] testing [of blockchain] in 2018 focused on creating the foundational framework for sharing information through blockchain between carriers, brokers and reinsurers. It was also a year for the building of the first true production-ready applications on that foundation.
2019 is all about the path to production. It is about testing, certification and moving to production what was built in 2018. By the end of 2019, we expect both frameworks and initial applications to be in production and generating real return on investment (ROI) for the industry by the end of this year.”
2. Avesta Hojjati, Head of R&D at DigiCert
“Blockchain platforms are becoming the number one, go-to solution for insurance companies where preventing fraud, cutting costs, and tracking claims are the priority.
With that in mind, we yet have come across a production-ready platform from any provider who allows an interaction between different enterprises. Platforms such as YoCoin, Guardtime, and Inmediate are first attempts only towards developing a fully capable platform with insurance as their main use case.”
3. Dr. Marcus Schmalbach, CEO at Ryskex
“It depends. Why? From my personal point of view there is not the insurance industry existing. I split up once into business-to-client (B2C), business-to-business (B2B) and Alternative Risk Transfer (ART).
Especially in the B2B and ART sector, the companies are working under high pressure on solutions with the blockchain. The topic is linked to the client level and has a high priority.
Unfortunately, I am not at home in the B2C sector, but I am a great fan of the Fizzy project. In the B2B [sector], I salute the Maersk case and in the ART sector the Tesla case should be named.”
4. Ryan Brubaker, CIO at Seven Corners Inc
“Blockchain is in its research and development (R&D) phase right now. We understand how powerful it will someday be, and are working to find the best applications for it. Blockchain is also something that is not yet easily understood. It is a complicated topic, so many insurance companies are focusing their time on truly understanding it, and understanding the standards that could be formed around it.”
5. Thiru Sivasubramanian, VP of Architecture & Technology Strategy at SE2
In Q4 2018, LIMRA’s Blockchain Council finalized the initial set of use cases. They also started work on the proof of concept for one of the use cases, Mortality Monitor. The goal is to use blockchain to better serve customers at their time of need without delay.”
6. Edgar Fernandez, Co-Founder of EOS Costa Rica
“The state of blockchain in insurance is still very nascent, with basic business models being challenged for insurance products. Teams are still validating risk models that can attract reinsurance capital, correctly price products and build legal frameworks for new insurance entities.”
7. Dr Mervyn Maistry, Founder and CEO of Konfidio
“Insurance companies are currently exploring the potential of blockchain within national and international consortia (e.g. B3i). Their main goal is to identify use cases where it makes sense to apply the technology to solve the industry’s problems.
While most insurance companies are still working on proofs of concept of internal or inter-firm interactions, Axa outpaced its competitors by directly addressing the consumer market with its Ethereum-based flight delay insurance solution branded as Fizzy.”
8. Hugh Karp, Founder of Nexus Mutual
“In short, we are still at the very early stages, with many proofs of concept but very few production implementations. Of these initiatives, nearly all are focused on stripping out administrative cost for large insurance companies.
In my mind, there is still a substantial question mark over whether this technology will achieve broad adoption within the existing industry, as it's currently viewed as just another cost-saving technology.”
9. Stan Nazarenko, CEO of Piprate
“In 2018 the insurance industry has passed the phase of initial interest and exploration and moved into the adoption phase. The first attempts were focusing on use cases borrowed from the fintech space, mainly around automated payments and transactional integrity. Now the attention is shifting towards the fundamental challenges specific to insurance, such as providing multiple participants in a typical insurance transaction with a consistent view of the insured risk, speeding up the information flow and reducing the volume of manual interactions required to conduct business.”
10. Satadru Sengupta, CEO and Founder of Halos Insurance
“Historically, insurance is defined as a contract between two parties. What has changed in the last couple of years, though, is a growing involvement of an ecosystem.
Insurance is slowly involving multiple parties looking to optimize their common interests while reducing frictions using technology. That's where blockchain keeps a huge promise.”
Have expert insights to add to this article?
Share your feedback and we'll consider adding it to the piece!ADD YOUR INSIGHTS