NEWS & EVENTS
The Blockchain challenge
As the Bermuda’s Technology Summit is taking place this week, Frank Perkins, Chief Executive Officer at inari, looks at the insurance industry’s adoption of blockchain. He says insurers and reinsurers have yet to embrace the full benefits of blockchain, but when they do it will be a game-changer.
With all the hype and white noise about insurtechs revolutionising the insurance and reinsurance world, you would have expected by now that insurers and reinsurers would be fully automated, and the roles of underwriters and brokers would be rendered obsolete.
The re/insurance industry has been notoriously slow to embrace technology to its fullest potential. However, there is one technology that is easy to adopt and could totally transform the way our industry operates. Blockchain could be the gamechanger everyone has been talking about and make a real and effective difference across the insurance value chain.
Blockchain is a decentralised digital ledger that records transactions and tracks access across a network of computers. If adopted properly within our industry, blockchain could be a solution that will give us more transparency, accurate risk ratings, and reduce the time and cost of placing a policy. It can also give underwriters, brokers and Managing General Agencies (MGAs) alike more cost efficiency by improving claims settlement and key processes such as compliance checks.
The big misconception with blockchain is that its only useful purpose is linked to crypto currency. However, in the insurance market, there is a fantastic use case for this immutable data. If you bear in mind that premium figures, rates, adjustments are not static and that in the past it has only been possible to see (easily) the current premium, this type of new technology (call it blockchain or distributed ledger) allows us to see how data has evolved and what were the contributing factors for getting to a “decision”.
However, there are only a handful of companies in the entire global insurance industry that are actively using blockchain effectively.
Blockchain solutions can remove up to 25% of expenses, according to a 2016 report by PwC, which stated that blockchain could deliver an industry-wide saving of $5 billion – $10 billion for reinsurers. Any way of saving money is welcome in an industry bogged down with expense ratios typically hitting a minimum of 5-10%, and in some cases up to 40%.
Leading the fore is Bermuda – an island that has worked hard to evolve and modernize with the latest trends in technology. The International Technology Summit held in Bermuda on April 11-14 will bring together leaders, regulators, and innovators from around the world to explore the latest breakthroughs in blockchain technology. In a place such as Bermuda, which is known as a jurisdiction that embraces and supports innovation and technology, it will be exciting to see the emergence of some really productive and impactful solutions using blockchain on the island.
Environment of trust
Insurance is an industry built on trust and knowledge transfer. Blockchain has the potential to create an environment of trust for insurers by providing a network with controlled access and a way to share valuable information securely. This creates a single source of truth.
Behind all the hype surrounding blockchain is a straightforward opportunity to cut costs and improve client satisfaction within insurance and reinsurance. It should be a natural step for companies to adopt this technology and start leveraging blockchain in different ways.
More could be done to speed up the development and acceptance of blockchain. For example, more global regulators could accept contracts under blockchain. Currently, certain countries and jurisdictions do not accept transactions under blockchain, which has resulted in many initiatives being forced to generate physical documents.
Inari can help with the blockchain challenge. We are a cutting-edge cloud-based platform with blockchain at its core. Using performance-enhancing Artificial Intelligence, inari enables a single point of contact when insurers, reinsurers, brokers, and MGAs work together. Policies on inari’s Distributed Ledger are indisputable, so there’s only one source of truth, maximising transparency and eliminating duplication.
For more information on inari and its blockchain offering, please reach out to Oliver Fox.