Blockchain to help insurers reduce ‘trust vacuum’
The internet has created a trust vacuum and by replacing outmoded and insecure centralized networks with distributed blockchain solutions insurers can reinstate control over private data, says risk academic and former CEO of Aon Benfield Analytics, Stephen Mildenhall.
Blockchain has been hailed as the cure of many ails in the insurance sector, described as an immutable (unchangeable) and unhackable database that can lower transaction costs and enables trust between strangers.
“Commentators often tout blockchains as a solution to the insurance industry’s processing and back-office inefficiencies,” Mildenhall says. “But this is a rather narrow view, and one which completely misses its true potential for insurers,” he notes.
Alleged instances of election hacking highlight the need for identity verification, he explains in an article called “Blockchain: Mechanics and Magic”.
The Equifax cyber hack reveals the weaknesses of centrally controlled repositories of private information, and blockchain technology allows to re-democratize data and reassert the individual’s control over their private data, Mildenhall says.
To enable this will require infrastructure and an alternative revenue model, Mildenhall continues. Insurers are well positioned to provide these services and to profit from the trust vacuum, stepping in to replace outmoded and insecure centralized networks with distributed blockchain solutions. This revolutionary model represents the true potential of the blockchain for our industry, he says.
Stephen Mildenhall is an assistant professor in the School of Risk Management, Insurance and Actuarial Science at St. John's University in New York. He was previously global CEO of analytics for Aon, based in Singapore, and head of Aon Benfield Analytics.
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