Blockchain and Its Impact on Insurance
This session at the NetDiligence® Cyber Risk Summit provided a basic understanding of blockchain technology and its potential application to the insurance industry.
- Neeraj Sahni, Senior Vice President, Willis Towers Watson
- Cristina Dolan, Co-Founder & COO, iXledger
- Meghan Hannes, Vice President, Cyber Product Leader, AXIS
- Scott Diamond, Managing Partner, Chicago Digital Asset Network
- Stephen Palley, Partner, Anderson Kill
Blockchain technology is a way to record transactions chronologically forming an immutable chain, providing an audit trail for digitized assets. There is no central point of failure, with data distributed in nodes (so many multiple points that it is impossible to deleted or alter the data) versus a client-server (where there is one source with a super user with admin rights). There are several security and efficiency advantages to this format.
From an insurance standpoint, this technology could allow the industry to create programmable trust-less contracts that cannot be altered or changed. Blockchain is tamper-proof. There is also benefit from use of “smart contracts”, which is a term that describes a script to trigger the performance component of a contract (like payment).
Another value proposition of blockchain is its ability to create a journey or workflow. There is no need for a mechanism to pull all these shards of individual data. Insurance could use this to create the journey between policy and claims. You must have good data to begin with to take advantage of this feature.
Blockchain is also going to have some coverage implications. First, there will be a need for new products related to it. A good example of this would be to protect the gig economy where money needs to be moved quickly to pay for services. It could also eventually work its way into existing lines like crime, cyber, D&O and property.
It is hard to say at this infancy stage how and when the insurance will adopt full use of blockchain, but there is a real opportunity to partner with technology companies and apply it. It is expected that technology will evolve and the human interface will become streamlined, simplified and easier to adopt.