Blockchain: time's up for hype - everyone is getting serious now!

Unless you are living in a cave, by now you would have been inundated by blog posts and news articles explaining the what & why of blockchain. I am definitely not going that route and in case your work didn't allow you the time to have a detailed look on this topic, I will simply direct you to an excellent report by EY which provides a strong overview: Link - refer the section: "Introducing the blockchain".

With so much coverage already on the benefits which this distributed and time stamped ledger brings, its time to take stock of some real world action which is already happening in this space. Being from the insurance sector it is natural that I track the developments within the insurance space. However, the developments are similar across sectors, and a simple web-search pertinent to your sphere of influence will give you a plethora of content related to this topic. Moreover, with technology led transformation effecting a convergence across sectors, we anyway can no longer plead ignorance to what's happening in other sectors.

Till 2016 most of the leadership speak focused on what can be done using blockchain. In 2017 & 2018, the narrative has changed to what firms are already doing with blockchain and which elements of the value chain are expected to see the first benefits. Within insurance, over the last 16-18 months, we have seen launch of platforms across lines of businesses along with working prototypes of smart contracts. Along with that, there have been multiple examples of new products which have deployed blockchain as the base of their design.

Multiple platforms being launched to create blockchain enabled ecosystems

While we at EY had a high focus on developing multiple blockchain concepts and platforms aimed at eliminating redundancies/ inefficiencies across the value chain, there were several other incumbents which continued to make gains in this area in order to firm up their market leadership. Following are some of the prominent launches which have been seen in recent months:

• EY launched a marine insurance blockchain platform last year in tie-up with several global leaders including Maersk, Microsoft, XL Catlin, MS Amlin, Willis Towers Watson, Guardtime & ACORD. The objective is to build a working blockchain platform that connects every major stakeholder in the value chain of one of the most complex lines of businesses. In the future, the same approach can be replicated for other lines as well. (Details)

• EY also launched Tesseract, a mobility focused blockchain platform, which will facilitate fractional vehicle ownership, shared use and seamless multimodal transport and consequently, shape the future of the largest non-life line of business i.e. motor insurance. (Details)
• In order to reduce health claim costs, improve reliability & reduce turnarounds, health focused blockchain platforms were recently launched by multiple nascent firms. (Example 1, Example 2)
• The sector also saw the launch of motor insurance blockchain platform by a leading aggregator which seeks to integrate all market participants and improve the reliability for all. (Example)
• Even traditional distribution channels are witnessing the establishment of blockchain as the underlying technology. Recently, a major Hong Kong based insurer launched a bancassurance blockchain platform to enhance customer experiences & operational efficiency. (Details)

Several proofs of concepts & product launches were seen across lines

• In partnership with EY, Allianz successfully piloted blockchain for a global 'captive' insurance program including cash transfer between countries. This prototype looked at three common process flows in the captive insurance cycle – annual policy renewals, premium payments and claims submission & settlement. It translated these processes into a distributed ledger environment thereby decreasing the time from start to policy, policy to premium and claim to settlement. (Details)
• Very recently, one of the largest global reinsurance firms entered into a long-term partnership with a blockchain based real time home insurer. The aim is to provide customers a seamless way of working with insurers to build a digital inventory of home contents, obtain a video survey based valuation and allow the purchase of a real time home insurance policy which reflects the actual risk faced. (Details)
• Industry consortium B3i - now B3i Services AG - introduced a blockchain prototype for property catastrophe reinsurance & expects to kick off first live trades by 2018-end. (Details)
• Two of the top five global insurers launched blockchain based flight delay insurance products in 2017 which offer direct, automatic compensation to policyholders whose flights are delayed. (Details here & here)
• Last year, a trio of some of the world's largest insurance, banking and technology firms successfully piloted a multinational, ‘smart contract’ based insurance policy (Details).

What we can expect going forward:

While 2016 had seen multiple insurers and market participants talking about adopting blockchain, the conversations in 2017 & 2018 have shifted to which new blockchain product or platform is being piloted or launched.

The advantages of blockchain technology in terms of improving efficiency and reliability will imply that adoption across the sector will happen at a rapid pace. It won’t be a surprise, if within a few years, blockchain becomes insurance sector’s default technology powering the entire information infrastructure rather than being an exception. The evolution of customer centric eco-systems where insurers will be a participant rather being the complete owner of the relationship will also hasten the adoption of blockchain not just in insurance but also in the sectors which are and will be working closely with insurance.

If you have any specific perspectives from your sector or your work on the increasing relevance of blockchain, please share in the comments below.