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Potential uses of blockchain have been debated in the insurance industry; product launches have been few. However there is hope: PwC predicts a 5 to 10 billion US dollars cost saving opportunity in a recent report and insurers are banding together.
Some of Europe’s biggest insurers have joined forces in an attempt to put Blockchain to the test to evaluate whether the technology can help make the insurance industry more efficient.
Back in October Aegon, Allianz, Munich Re, Swiss Re and Zurich have launched the Blockchain Insurance Industry Initiative B3i aiming to explore the potential of distributed ledger technologies to better serve their clients.
Potential benefits of blockchain in insurance
Some of the potential benefits include digital contracts enablement and transactions amongst multiple parties to be executed in a secure, transparent and auditable way.
Blockchain can also establish trusted relationships among all participants, providing a consistent, automatic contract execution environment where transactions and contracts are stored on a shared ledger, reducing significantly the administrative burden.
Implementation in a consistent and compatible way, based on minimum standards to exchange data and transactions via Blockchain will be paramount for B3i members. Is it realistic to expect collaboration among all these entities? In my opinion this is going to a significant challenge as they all have different corporate cultures and ways of doing things. Rod Drury, the CEO and founder of cloud accountancy software Xero once infamously stated that blockchain "won't succeed in banking because of surveillance culture and tribalism". While the language seems harsh, the insurance industry certainly has similar traits.
Moreover, proof of concept applications will be critical to prove the potential within the insurance and reinsurance environment and look at how it could be applied in practice. Blockchain applications, like any viable business venture, need to provide adequate solutions to specific problems.
There are challenges ahead for insurers working towards Blockchain, however the potential benefits may justify the pains down the road.
Research, thoughts and opinions are my own