The insurance industry needs a “killer use case” for blockchain that all stakeholders can agree on before moving forward with more widespread adoption, a speaker suggested Wednesday at the Insurance-Canada.ca Technology Conference.
“I think we are still on that journey of finding that killer use case where 75% of the market can say, ‘Wow! We can really see an improvement to our bottom line if we were to participate,’” said Louisa Bai, blockchain market lead with Deloitte Canada. “Right now, I don’t think everyone can agree that proof of insurance is the killer use case amongst everyone; we can’t agree on subrogation being that killer use case.”
Blockchain is a decentralized digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly. It is considered a “team sport,” where all parties must agree to share the same platform and work together. But what if one company is not comfortable sharing their “secret sauce” with another? That’s when it can be difficult to implement. “With the insurance industry, I’m not sure if there is one team captain,” Bai noted.
“The reason you are seeing consortiums and the reason you are seeing some of these things go in fits and starts is because we are trying to take a design principle where we [typically] retreat to our separate corners and do our own thing and figure out the differences later,” added another panelist, Mike Fitzgerald, senior analyst – insurance, with Celent, a research, advisory and consulting firm focused on financial services technology.
One well-known consortium is B3i, the blockchain insurance industry initiative. Formed in late 2016, it is a collaboration of insurers and reinsurers to explore the potential of using distributed ledger technologies within the industry for the benefit of all stakeholders in the value chain.
For the broker channel, proof of insurance, such as certificates of insurance and auto ID cards, would be one of the largest benefits of the technology, said the third panelist, Lynne vonWistinghausen, senior vice president and head of operations and technology with commercial brokerage Marsh. “It’s a huge administrative dream for brokers, and I would think for our clients, if they could get immediate proof of insurance. It would be a game-changer for us in the broker community,” vonWistinghausen said during the panel Realizing Blockchain’s Insurance Potential, moderated by Neil Mitchell, co-founder and president of Player’s Health Cover.
It would appear the industry has been moving towards that “killer use case.” Bai said about two years ago, discussions revolved around identifying the right business problem to solve. Now the problems have been identified and the conversations are shifting to: “‘How can you help us bring in the industry players that can also benefit from this? How can you help us establish that network where we can mutually benefit and also share the cost of building something together?’”