Why blockchain is not ubiquitous yet in insurance
July 20, 2020 by Greg Meckbach
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Blockchain has been around for a while, in cryptocurrency for example, but the property and casualty industry needs to work together and agree on what brokerages and carriers should use blockchain for, speakers said on a recent webinar.
“Blockchain is a community or industry type of initiative. One person can’t do blockchain by themselves,” said Lynne vonWistinghausen, head of operations and technology for Marsh Canada.
“So as an industry we need to come together and agree — what will we do blockchain together on? Not just one company doing blockchain. It’s a data exchange type of thing,” she said this past Thursday during How COVID-19 can improve your digital health, a webinar hosted by Canadian Underwriter.
A webinar audience member asked whether the speakers have seen any head starts from insurance companies or brokerages on blockchain or smart contracts.
“There is a lot of talk in the auto industry where you would be able to drive your car off a lot and it will automatically be insured through the use of blockchain, and I think it would be fabulous to see it,” said vonWistinghausen.
“I haven’t seen us be able to use it well yet because we do not have a lot of the foundational work done, which is digitizing from the front end, having a lot of standard processes and having our back ends communicate. I know we are laying the foundation to when they take advantage of blockchain but I have not seen it come to fruition yet.”
Blockchain is the distributed database technology used by Bitcoin and other cryptocurrency providers.
“It’s essentially a database that gets split across many systems and the whole point of it is, no one person can tamper with the data because everybody else needs to validate it,” Ron Glozman, founder and CEO of Chisel AI, said during the webinar.
“The whole point is, you could pass around a token representing a car or a house and everybody knows what it refers to. So unless every single (broker and carrier) is on that single blockchain, it loses the distributed ledger and it is back to just being a database,” said Glozman. “I think it’s a cool technology but it’s less about the technology and more about what are we going to do it on and figure out the standard.”
Webinar speakers were also asked about the issue of data standardization among brokers and carriers.
“I think it’s rare — I have not seen examples — where technology crushes your competition,” said Aviva Canada chief claims officer Bryant Vernon. “It’s usually how you implement and use it that determines how successful you are. Things like data standardization — it’s just a no-brainer.”
One insurer-driven firm that is working on blockchain [also knowns as distributed ledger technology) is B3i Services AG which was founded in 2018. Its shareholders include the top four European reinsurers, AXA-XL, Zurich and Allianz, among others. B3i’s first application, for the reinsurance market, was a Catastrophe Excess of Loss product launched this past September.
Feature image via iStock.com/ipopba
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If Canadian insurers can’t even agree on and implement ubiquitously a simple end to end standard for personal and commercial lines data exchange then how could these digital dinosaurs come to consensus on a blockchain implementation. Let’s get the low hanging fruit harvested first then we can get fancy with new technologies looking for a home.
A story on crypto-currency.
Hostile aliens arrive on planet Earth tomorrow. They destroy all our military strength in 53 minutes and proceed to start taking all of our resources, the metals and our water. Scores of men and women are enslaved. Surprisingly, they leave all the crypto-currency. Not a single Bitcoin is taken. Those fools! The nerds on planet Earth rejoice!
If you’re looking for a moral to the story. It’s the same as “The Emperor’s new clothes”.
On Blockchain. The definition above is perfect. ““It’s essentially a database that gets split across many systems and the whole point of it is, no one person can tamper with the data because everybody else needs to validate it,” Ron Glozman, founder and CEO of Chisel AI, said during the webinar.” Lets give blockchain more credit than it is. Lets call it the PERFECT database (even though it is not). So why then haven’t we used it? Because we already have near-perfect databases. Why spend XXX millions for a very marginal improvement when there are so many better places to spend money? Truth.