Blockchain technology will be a game-changer for the industry

Blockchain technology could be a game-changer for the re/insurance industry, Ed Hochberg, chief executive officer of JLT Re North America, told PCI Today.

“This technology has a lot of potential. If we successfully implemented blockchain across the industry, it would save a lot of processing and back office hassle,” he explained.

“Everyone would be on the same page when it comes to the financial aspects of a transaction and this could be quite powerful.”

Hochberg added that the most obvious first adopters of this disruptive technology will be personal lines, rather than commercial lines, in the early days.

“However, we are seeing some potentially disruptive technology in the smaller end of the commercial scale. The Hamilton AIG insurance venture is quite exciting and has the potential to be disruptive,” he said.

The challenge facing the disruptors comes when initial enthusiasm from clients meets logistical reality, he explained.

Insurers operate in a regulated business, and while regulations are for the good of the consumer, he said, technology companies can get frustrated when they need to deal with so many regulators.

At the conference, JLT Re also advised casualty insurers to “hedge against the growing number of pressures they face”.

Hochberg said that there has been a fairly unprecedented period of benign loss activity, but this could not continue indefinitely.

“Casualty insurers are facing many issues at the moment and while some think there will be ‘lower for longer’ interest rates, which is a key issue for insurers, political uncertainty creates some doubt on the ‘lower for longer’ theory,” he said.

“The outcome of the US presidential elections could have an impact on rates. This would create a two-pronged effect of reducing the value of the bond portfolio and having a longer exposure to those same declining assets.”