Benefits of blockchain become clear in 2017
Blockchain technology was embraced by the re/insurance industry in 2017 as the benefits became apparent, according to executives interviewed by Intelligent Insurer for our year-end questionnaire.
“If 2016 was about awareness and a healthy mix of excitement - possibly hype and a healthy dose of scepticism - 2017 has been about the emergence of this technology as having the potential of being a real game changer for the sector,” said David Edwards, founder and CEO of ChainThat.
“Blockchain, or more appropriately termed, distributed ledger technologies (DLT), are still very new,” Edwards explained.
“2016 saw the industry beginning to become aware of this enabling technology and start to consider if it could work on a technical level when you applied considerations like security, privacy of information, or performance, in a commercial environment.
In 2017 the blockchain technology got new momentum. In October, the blockchain insurance industry initiative B3i, for example, added 23 new members to its market testing programme.
The B3i is a collaboration of insurers and reinsurers formed to explore the potential of using distributed ledger technologies within the industry for the benefit of all stakeholders in the value chain.
Blockchain technology allows for the recording of data—transactions, contracts, agreements—in a way that means the data are simultaneously stored, but also updated in real time—on hundreds or even thousands of computers globally. It is meant to make the data almost impossible to tamper with or hack into—yet it is also accessible and updated instantly for every user.
“Leaders have realised that DLTs offer the commercial specialty re/insurance sector both opportunities - in terms of substantially reducing the ever-growing operational and administration cost burden that characterise the sector and which clients pay for - but also a threat: that of potential disintermediation of parts of the distribution chain,” Edwards said.
“Without doubt, application of DLT will have both these effects, but it has the potential to be very beneficial to any party which embraces it and uses it to make their businesses more effective, delivering benefits not just to themselves, but to their end client, the consumer of insurance services,” Edwards explained.
While 2017 began as the year of ‘What is blockchain and will it work?’ the year ended as ‘What is our path to using DLT in our business, and how do we learn quickly?’.
“It’s a big step in one year,” Edwards said.
This is just a snapshot of what executives told us in our Christmas questionnaire. For the full comments from all 16 executives that took part in our survey, please click here.
