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Given the blockchain's ability to bring about radical changes in some areas of insurance, the insurance industry is moving towards a better understanding of its applications globally. (Shutterstock)Blockchain technology has been the subject of a heated debate this year. We probably will not see extended applications for a while, but I firmly believe that not only will the blockchain play a pivotal role in insurance, but it could also be a turning point.
The reason is simple. While insurance mainly concerns pricing and risk management, it is also based on the processes: hundreds, even thousands of them. These individual processes form the basis for the way in which insurance is negotiated.
Blockchain technology can streamline data and processes to make them easier to manage or even eliminate them altogether.
Studying on cryptocurrency
Given the potential of the blockchain to completely reconfigure the same automated processes from current technology, it is crucial to gain a broad understanding of how it is currently used in the insurance industry. So my company has recently undertaken a formal academic study on blockchain.
We have assembled a research group of six MBA students at the Stern School of Business of New York University (NYU), which was recently ranked third in the nation for blockchain studies, along with a Harvard Business School student. Our goal was to determine the role, present and future of blockchain in the industry and how it can affect specific insurance-related use cases.
In particular, we chose to work with the agnostic participants of the academic sector, rather than with the insurance sector, believing that this would give a new perspective on the project compared to that limited by the preconceived notions on insurance and insurance technology.
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Giving a closer look
Before discussing the results of the research group, a few words of explanation on the blockchain. It is useful to remember that blockchain is not an individual, a dominant thing. There is no such thing as "The Blockchain" as it exists with the Internet. Blockchain is a technology that uses within it a structure based on blockchain, a technology of digital ledger. Blockchain is simply a new way of structuring databases that allows greater security and accessibility.
In the study of the blockchain, our research group evaluated the sentiment and preparation of the industry for the introduction of the blockchain. We also created scenarios to determine how it could affect specific insurance-related use cases.
What has been clear from the start is that, given the blockchain's ability to produce radical changes in certain insurance areas, the insurance industry is moving towards a better understanding of its applications globally. Our researchers have also fully documented the numerous insurance companies, from large multinational companies to regional carriers, who are already starting projects using blockchain technology.
Clearly, innovators in our industry are investing heavily in technology right now.
The strength of the blockchain lies in its effectiveness as a highly secure platform capable of providing a "single version of the truth" to multiple parties involved in a particular transaction or process. Because insurance organizations operate in a company that relies on multiple third parties who have access to data and information, authorized blockchain-based private systems retain a great deal of interest in keeping their data protected and properly shared. with the right recipients. From claims to subscription to distribution to customers, everyone is interested in providing accurate and timely information to their respective ecosystem.
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In advance of other sectors
Although we were not surprised by the fact that there is a wide movement to adopt technology, what surprised us was the degree to which insurance and financial services in general are at the forefront. In fact, insurance has a great opportunity right now to position the entire industry as technologically advanced early adopters. It is essential for our industry to maintain the momentum that has been achieved in obtaining an operational knowledge of the blockchain and not lagging behind in the adoption curve.
Although currently in its infancy, blockchain has the potential to be a fundamental technology in insurance. While the possible benefits of adoption are numerous, as with any new system or technology, blockchain-based systems do not necessarily fall into the category of "If you build it, they will come". These technologies still need a sub-industry of companies built around them that can market them effectively. They face the same challenges in terms of user training and training as any new technology that has been presented previously.
As an organizational focus, blockchain has more similarities with the way companies think of their IT infrastructure, databases and data stores than the connective tissue that is the Internet. Blockchain-based back-end systems could replace technologies such as SQL databases and we could see blockchain-as-a-service replacing current hosting-as-a-service cloud models. After analyzing the results of our researchers, we anticipate that generalized adoption will take hold in insurance within the next decade.
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Stefano Bruno ([email protected]) is president and CEO of VUE Software, a distribution modernization company known for its leadership in thought and technological innovation in the insurance industry.
