How blockchain is set to shake up the insurance in­dus­try

Weekend Argus (Saturday Edition) - - FRONT PAGE - SIZWE DLAMINI

AS BIT­COIN and blockchain in­creas­ingly fea­ture in the media, the ques­tions of who can ben­e­fit the most from crypto-cur­ren­cies and the plat­forms that carry them be­come more press­ing.

Bit­coin is a dig­i­tal, global cur­rency that peo­ple can use to per­form trans­ac­tions across the in­ter­net. Blockchain, as it per­tains to Bit­coin, is a pub­lic online ledger of all ex­e­cuted Bit­coin trans­ac­tions.

Jonathan Jardim, se­nior de­vel­oper for Ru­bix Dig­i­tal So­lu­tions – a sub­sidiary of Sil­verBridge Hold­ings – says in­sur­ers stand to ben­e­fit from this form of fi­nan­cial tech­nol­ogy (fin­tech).

Blockchain can be de­fined as a dis­trib­uted dig­i­tal ledger in which trans­ac­tions, such as those made in Bit­coin, are recorded chrono­log­i­cally and pub­licly.

In essence, blockchain fa­cil­i­tates se­cure online trans­ac­tions, and, be­cause it is de­cen­tralised and used to record trans­ac­tions across nu­mer­ous com­put­ers, records can­not be al­tered retroac­tively.

Jardim says: “While many be­lieved that blockchain would not have a sig­nif­i­cant im­pact on the insurance in­dus­try, the rise of fin­tech start-ups has changed this. More nim­ble and in­no­va­tive (at least ac­cord­ing to per­cep­tions) than the more le­gacy-driven insurance com­pa­nies, fin­techs are em­brac­ing a host of for­ward-think­ing so­lu­tions to at­tract cus­tomers.”

Cus­tomers are in­creas­ingly on the look-out for insurance so­lu­tions that are tai­lored to their unique needs, re­sult­ing in fin­techs start­ing to gain a foothold in the market. This means tra­di­tional in­sur­ers need to change their ap­proach, not only to prod­uct de­vel­op­ment and cus­tomi­sa­tion, but also to how claims are filed and paid out.

“Dis­trib­uted ledger tech­nol­ogy is about more than just pro­vid­ing a medium for Bit­coin trans­ac­tions. With insurance being driven to a large ex­tent by the claims process, blockchain seems to be an ideal way to au­to­mate pro­cesses that are still mainly paper-driven, man­ual and prone to hu­man er­ror,” Jardim says.

“Al­ready, a sig­nif­i­cant num­ber of banks glob­ally are ex­per­i­ment­ing with the tech­nol­ogy to im­prove cus­tomer trans­ac­tions. Why should insurance be any dif­fer­ent?”

Swiss Re and sev­eral of Europe’s big­gest in­sur­ers have joined forces to put blockchain through its paces and see how it can make their busi­ness more ef­fi­cient. Their es­tab­lish­ment of the Blockchain Insurance In­dus­try Ini­ti­ate, also re­ferred to as B3i, is fo­cused on look­ing at how dis­trib­uted ledger tech­nolo­gies can better serve clients through faster, more con­ve­nient and se­cure ser­vices.

Re­search by ac­count­ing firm Price­wa­ter­house­Coop­ers shows that, although in­sur­ers have been slow on the up­take of blockchain, it makes sense given how mul­ti­ple par­tic­i­pants need views of com­mon in­for­ma­tion. In ad­di­tion, the re­moval of a “central author­ity” record keeper that acts as an in­ter­me­di­ary has the po­ten­tial to re­duce costs and com­plex­ity.

“The dig­i­tal busi­ness land­scape is see­ing in­sur­ers con­tin­u­ally need­ing to rein­vent them­selves to ad­just for cus­tomer de­mand. Blockchain pro­vides a great op­por­tu­nity to cap­i­talise on a dif­fer­ent way of do­ing busi­ness that ben­e­fits all stake­hold­ers, from the cus­tomer right through to the in­surer it­self,” Jardim says.

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