Blockchain will transform insurance but requires leap of faith: PwC
Blockchain technology can make the placement process, claims management and compliance tasks more efficient and cost effective as long as re/insurers, underwriters and brokers collaborate with one another, according to a report from PwC Bermuda.
PwC’s blockchain team, which started in January, partnered with Z/Yen in a global industry survey to determine the practicality of blockchain technology in the insurance industry.
The report, ‘Chain Reaction: How blockchain technology might transform wholesale insurance’, was based on interviews with over 50 brokers, re/insurers, regulators and trade bodies.
The report found that the placement process is improved by facilitating the placement and management of an insurance contact, including all relevant documentation and then managing all changes and transactions throughout the life of a contract.
It suggest claims management would improve as a blockchain incorporating all documents created in a claims process would enable all parties involved to instantly access information, monitor and review the process.
As for compliance tasks, the report suggests blockchain would reduce the burden on customers and businesses around proof of identify, anti-money laundering and sanctions processes.
Arthur Wightman, insurance and Bermuda leader at PwC, said: “The report concludes that not only does blockchain offer the promise of cost reduction and efficiency, but it could also enable revenue growth as insurers attract new business through higher-quality service.
“Research by PwC finds that 56 percent of firms recognise the importance of blockchain, but 57 percent concede they do not yet know how to respond. We want to help firms make this leap. Financial technology solutions are becoming a catalyst for change and innovation in the insurance and broader financial services industry.”
According to the report, blockchain technology will improve the relationships with stakeholders as errors are reduced and accuracy improved. It suggests capital requirements may also be reduced as insurers will proceed to an agreement faster.
“Further, as reinsurance is an important sector in the global economy as it transfers risk from organisations to insurers and therefore underpins large-scale business and trade globally, financial technology can also help the industry to discharge its responsibilities for the common good,” Wightman added.
