Author: Vikas Acharya
Commercial & Specialty (Re)Insurance is a very important aspect of the global economy and yet, historically, has been very slow in embracing change.
Emerging technology such as Blockchain promises a step change improvement in operational efficiency and is primed and ready for the reinsurance markets.
In this article, I discuss if blockchain technology in commercial insurance is ready to cross the chasm.
Commercial and Specialty insurance markets are now rapidly emerging as early adopters of blockchain technology for the profound, transformational and disruptive effect that it can bring to the business models. These are unprecedented times where innovation is not optional anymore and pace of innovation is at its peak.
Insurance Blockchain Framework
There are many articles out there that talk about current pain points and insurance use cases for blockchain fitment. I wouldn’t like to reiterate them here. But, I want to surface an enabler – ChainThat’s Insurance Blockchain Framework (IBF) that allows brokers, insurers and reinsurers to operate faster, quicker and cheaper with enhanced governance and transparency.
ChainThat has used its framework and successfully implemented blockchain PoCs for some of the major insurers and reinsurers in Europe.
The framework has a #SmartObserver that supports #SmartEndorsement i.e. it observes events on a policy (or a claim) and traps a change to a state of that policy (e.g. quote accepted, declined, claim agreement, negotiate terms etc.) in real-time. It self-executes pre-configured smart contracts, then quickly and securely notifies relevant participants about the updated position of the policy. No delays. No Reconciliation.
The Framework includes key technology layers incorporating blockchain, SmartContracts, Security, Messaging and Storage which all support the Business collaboration services which are presented through an interface (API) to integrate to existing systems and support the decentralized set-up.
It would be transformational if we could create a global unified standard for SmartContracts that allows pure peer-peer transactions across geographies, unlocking the global potential. This article explains how these SmartContracts can evolve using the existing and widely adopted ACORD data standards.
But, where are we in terms of adoption of Blockchain?
From marketing 101, we know how the technology lifecycle changes. First you have the innovators and early adopters, those who take on a new technology knowing it is unproven and risky, but see the competitive advantage that comes with being a ‘first mover’. If that technology succeeds, it crosses ‘the chasm’ into mainstream adoption. Laggards will be eaten away as they think that innovation is optional!
Blockchain is in the early adopter phase and some (re)insurers and brokers are already executing their innovation agenda by doing PoCs. There are many steps to be taken (creating consortia, defining unified processes and standards, agreeing on integration approaches), for an enterprise market-wide adoption. But, ChainThat’s Insurance Blockchain Framework will help in that journey, along with the insurance community, to cross the chasm and unlock mainstream adoptions.