Blockchain Live 2018 - Insurance

It is time to get blockchain out of the lab and into the business.

If you have heard Ken Marke, CMO at B3i speak on Insureblocks or at an event, it shouldn’t surprise you when I say he has a way with words. Being able to captivate an audience whilst speaking about insurance in the afternoon session at Blockchain Live 2018 is no small proposition. Yet, Ken did a remarkable job introducing B3i, discussing the hype around blockchain and sharing his personal insights.

Blockchain is not always the solution.

In his solo address to the audience, Ken was quick to point out the hype surrounding blockchain and made a reference to the Gartner Hype cycle for emerging technologies. Against the backdrop of a vast number of blockchain POCs in the industry today, he suggested that if all that is needed is a shared ledger, it is better to use Dropbox! This may have been a tongue in cheek remark but the point is that you don’t need a sledgehammer to crack a nut.

Blockchain is a toolbox.

Ken compared blockchain to a Swiss Army knife – you may think this has something to do with the fact that B3i is a Swiss company, unfortunately this is just a coincidence. Highlighting that parties must make a choice to or not to use blockchain, he recommended using blockchain only in cases where more than one function of the blockchain is absolutely needed.

He proceeded to explain this point by using an interesting example – although a Swiss Army knife has a corkscrew, it would make more sense to just use a corkscrew if all you needed to do was open a bottle of wine!

Blockchain in Insurance

Ken made it clear that new blockchain based products (Property Cat XoL and commercial insurance) are still very early stage and largely experimental. B3i is currently targeting the “low hanging fruit” i.e. it is attempting to increase operational efficiency by deploying blockchain to replace paper exchange, admin work and reconciliation.

He pointed out blockchain can save 30% in costs which would open opportunities for insurers to re-visit product designs that were useful for customers, but which had to be abandoned due to cost constraints. At the end of the day, InsurTech, blockchain and insurance is all about the customer. Ken left the members of the audience who were representing insurance incumbents to think about products that were not launched due to cost constraints. 

A member of the audience asked Ken for his views on Etherisc and Black Insurance. To this, Ken responded that the initiatives in the insurance industry which attempt to resolve customer pain points are great. When asked about the choice of blockchain protocol, Ken stated that B3i chose Corda by R3 due to its scalability and the fact that it is an enterprise grade blockchain solution.

Since Etherisc runs on the Ethereum network and the B3i products run on Corda, the next question was regarding interoperability. Ken answered this daunting question by stating that there are companies out there investigating interoperability across different protocols and added that Corda is great for interoperability within projects on the network. On the topic of interoperability, Keith Bear, VP – Financial Markets at IBM, added that there is a growing effort in the Hyperledger community to facilitate interoperability between the Hyperledger fabric and Ethereum – perhaps, something to think about for insurers.

Personal insight

When Keith Bear asked the question about blockchain leading to disintermediation of some parties in the insurance value chain, Ken answered by saying in the future all players in the value chain that are in effect intermediaries between the capital suppliers and the risks/policyholders could be disintermediated by technology.

This is an interesting remark given that these stakeholders have been members of B3i including brokers who are keen to keep up to speed with emerging technology to ensure they do not get left behind. There is a very real threat which exists that could see intermediaries (especially those who function solely within sales channels) be disintermediated.

Legacy systems can be fixed; legacy mindset cannot be fixed.

In his closing remark, Ken expressed that the biggest barrier to technology adoption in insurance is the legacy mindset. In his opinion, the future of insurance is a combination of IoT, Blockchain and AI.

He emphasized that B3i is keen to welcome others to develop products on their network – hence, he informally announced the launch of the B3i Membership Community – something he had touched upon briefly in a Newsflash episode on Insureblocks.

Thus far, B3i has been shareholder led but is increasingly looking to attract talent and interest from enterprising individuals and start-ups who wish to participate in the growing effort at B3i. The Membership Community provides an excellent opportunity for you to participate and engage with B3i.

It would be interesting to hear your opinion on the role of blockchain in the insurance industry. If the Membership Community at B3i sounds interesting, do stay tuned. B3i is expected to make a formal public announcement about the same very shortly!

DISCLAIMER

This publication has been prepared by the author to inform readers about the discussion surrounding blockchain in insurance at Blockchain Live 2018 and does not constitute professional advice. The reader should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, the author does not accept or assume any liability, responsibility or duty of care for any consequences of the reader or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

Views expressed (if any) are the authors own and do not represent those of B3i, its members or its employees.