The Weekly Wrapup is an analysis of the week’s insurance tech news from the editors of Digital Insurance
Insurers are beginning to answer questions around how and when blockchain will be fully utilized in the industry, as multiple organizations continue to launch new proofs of concepts to test out the ledger technology.
The majority of early-stage pilots in insurance have focused on providing instant proof of coverage for customers. Industry consensus says that proof of insurance on the blockchain offers automation, heightened security and a guarantee that shared information will not be tampered with.
With this in mind, Marsh, in partnership with IBM, ACORD and its client ISN, rolled out a new blockchain product on April. 16, aimed at providing commercial proof of insurance to employers hiring contract workers. ISN, a collector of more than 67,000 contract employee records, is the first of Marsh’s clients to pilot the product in market. Other companies have expressed additional interest in leveraging the platform as well, Sastry Durvasula, Marsh’s chief digital and data analytics officer, told Digital Insurance last week.
Nationwide also recently agreed to pilot a blockchain-based proof-of-insurance concept on an application being developed by The Institutes RiskBlock Alliance, a consortium of insurers attempting to develop standardized blockchain applications for the industry. The application would allow law enforcement officials to be assured of up-to-date, accurate coverage information from motorists.
An early outlier to the blockchain for proof of insurance trend is Etherisc, a member of Plug and Play’s 2017 winter accelerator startup cohort. The insurtech, this week, launched a new insurance product, intended to eliminate the need for carriers to get involved during the claims process after a natural catastrophe. Using a library of automated smart contracts, Etherisc can transparently record transactions, automate premium calculations and distribute claims payouts following a loss, Blockchain News reported.
Such activity should propel the global blockchain market to grow up to $14 billion by 2022, according to market research from Netscribes. By then, insurance use cases will not be limited to just verifying coverage, industry members predict. As an example, the ledger technology could prove critical after automobile accidents involving connected cars as a one-stop shop for claims information proving which driver was at fault, Chubb’s SVP of Digital Analytics Puneet Bhardwaj said last month.
In all, 10 potential use cases for blockchain already exist in insurance. They include: product authentication—to help users check for counterfeit products and fraudulent transactions—smart reinsurance contracts for automatic payments on straightforward claims, automating customer verification and keeping and creating company business records. Of all the use cases identified by Bhardwaj, he notes Chubb is currently working on at least half, but did not specify which.
“Blockchain is one technology that if you don’t know it today, learn it because it’s coming in the next five to 10 years,” he added.
In a November 2017 report, Ernst & Young also identified its own applicable use cases for the technology in insurance. These include fraud detection, smarter risk selection based on external data and leveraging connected IoT data for improved actuarial models.
“It’s not hype to say that the value creation opportunity is huge and the possibilities of future applications are many. Similarly, it’s not hard to see how distributed, secure, peer-to-peer ledgers — the mysterious and exotic-sounding technology behind blockchain — may one day be as common in the insurance industry as Structured Query Language (SQL) databases,” the firm wrote. “Blockchain has the potential to evolve into a core, underlying element in the technology stacks of most P&C carriers, supporting a diverse range of processes and part of your company’s future technology ‘plumbing.'"
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