Blockchain For Personal, Commercial & Reinsurance - Instech Conference 2018
Blockchain For Personal, Commercial & Reinsurance – Breaking The Back Office Inefficiency Where The Stakes Are High
Blockchain is a high impact word everyone loves to use. It is supposed to make a huge potential difference in every walk of life. It is also attracting huge investment from just about everyone on the planet. For the world of insurance, the application of blockchain is a much more concrete notion and although most insurance companies are therefore interested in it, very few as yet fully understand and use blockchain. It seems that blockchain will fully digitise all insurance processes allowing for efficiency, transparency and price reduction. So the question is how, and how quickly? Join this panel to find out.
The following is verbatim from B3i CMO, Ken Marke’s panel discussion at the InsTech Conference.
When should we use Blockchain, and when shouldn’t we?
I'm going to try and answer the question in a slightly different way. I relate back to the point in time when I was trying to explain to our group CEO what blockchain was. I went through these five attributes. It was cryptographically secure. It was smart contracts and so on and so forth. He said, "Why is that different to what we have today?" I said, "It isn't. You can do all of that stuff today, so you don't need a blockchain." To all of you in the room, blockchain, you don't need to bother with.
There's one reason why you need to bother with it because it does all of that in one place. Whereas all of those attributes that you can do today, you're doing in silos. You're creating friction and you're creating opportunities for mistakes and so on and so forth. That's the way I described it to him. I think he got it at that point. He's quite a deep thinker. To take the opposite of your question, when would you not use it?
You're not going to use it when you're seeking a competitive advantage and you don't really want to share that with someone else. Otherwise, it won't be a competitive advantage. You're not going to use a blockchain in a sense when you're trying to benefit your own company singularly from it. The way B3i has approached it is actually we're trying to solve a problem in the market. This problem, particularly with our first use case, is around the friction, that Walid (Al Saqqaf) was talking about and trying to resolve that issue for the whole market, not just for an individual company. So, tend not to use it in a sense of a singular personal company approach.
What does disintermediation look like in your industry?
Just to echo slightly what you said. I mean from the customer's point of view, that end user, does he really care who gets disintermediated? The answer is no. If he's getting something better out of it, he's very happy. Actually it's what I said, it's up to the intermediators, whoever they are, to actually take advantage of technology and do what they do better than they did before. Thereby, giving the customer a better solution. The reality is if we stop to think about who pays the bills, the customer, they don't really care who gets disintermediated or not as long as they get a better deal. I would tend to keep that in mind.
Does Blockchain allow the customer more control over their data?
I sometimes use the analogy of banks, and it's maybe not a perfect analogy, but in the context of having your own data and having control of it and putting it into a data vault, where do you put your money? You put it into a bank.
When someone needs some of that money, you give them a direct debit or some kind of mandate to enable them to take what they need. I think in the world of insurance, where we don't trust ... Customers don't trust what the insurers do with their data. The analogy there is if I could lock my data away and only let the insurer have what they need for that moment in time and then it expires, I think that would increase trust enormously with customers.
When you think of these concepts like data vaults, it's not that far removed from the banking system. Okay, I know you're going to say the banking system isn't perfect and money can go missing and all sorts of things can happen. There's a real opportunity that I think would resonate with customers.
Do you think there is a need for more governance around Blockchain?
First of all, governance could be more efficient. Blockchain can help, so that's a good thing. You touched on that. Then, the second thing you mentioned was standardisation. I think governance isn't just about making a whole load of rules. I know data standards are rules in a certain way. Part of the governance around blockchain is about agreeing the data standards, the standards through which this information will move seamlessly from one block to another, blockchain to another.
That is as much as part and parcel of the governance, so that is needed. In fact, if we'd only got our head around data standardisation years ago, we would probably have avoided a lot of problems we have today. At least, the concept of blockchain does engender that point.
What are the current challenges and inhibitors to Blockchain?
The biggest challenge to really getting blockchain a lot of traction is mindset. I often talk about the three Ls, the legacy systems, the legacy products, but the biggest problem is the legacy mindset. Whether it's a not invented here syndrome, whether it's I don't understand it enough, whether it's a load of hype and it's really never going to happen, for me, that's the biggest challenge. In fact, I mean the way we're approaching overcoming that is through education, education, education. There's always three of everything.
In this case, it really is about education. Why you're sitting here is to learn more about blockchain. It's not about the use cases. Give me examples of use cases is what I hear all the time. No, you don't need to hear about use cases. What you need to know is what blockchain has the potential of doing to help you solve the problems that you've got on your patch.
As soon as you can start to understand those very, very basic concepts, then you can start to think of problems that you could solve. Then, you can go and bang on the doors of your tech terms or your innovation teams and say, "Fix this for me. Have a go at it using blockchain rather than you going away and inventing some toys which I don't really have any interest in."
How do you alleviate the fears around Blockchain?
We've got Tim Marlow sitting in the room, and Tim's an authority on autonomous cars. Tim from Ageas UK. I worked with Tim before and the concept of autonomous cars has been around for quite some time already. I remember five years ago we thought it was 30 years away. Now, it's two years away or it's even on the road today. I'm just using that as an illustration. With something new that comes along, there has to be a lot of experimentation and testing and education and understanding. You even have to talk to regulators and try to educate them as well, this new world.
[Tim Marlow, Ageas UK] “There are some downsides to blockchain as well. It is incredibly network and space hungry.”
And so are autonomous cars. They're a network. They talk to each other because that's how they don't bump into each other. I'm just using that as an analogy that when something new comes along like that, it just doesn't suddenly fall off the cliff and suddenly, instantly everyone's got a blockchain. It is about education. It is about experimentation.
The sooner you get in there and start doing that, the sooner you start to understand how it works and what all the pitfalls are and making sure those pitfalls don't become big, big, big pitfalls. The last thing you want to have is a whole bunch of cars crashing into each other, in the same way as you don't want blockchains start losing data all over the place.
The B3i vision is to make insurance more relevant, accessible and affordable for consumers through the power of the ecosystem founded on Blockchain technology which will enable participants to create innovative solutions, products and services.
Our mission is to:
- Improve the way data, claims, capital, payments are disclosed, used, automated and managed
- Focus on value adding client service, risk prevention and risk management
- Make insurance risks more tradeable
- Make insurance more affordable with an improved client experience
B3i’s purpose is to provide an ecosystem which provides efficiency improvement and cost saving opportunities as well as enabling profitable growth through innovation and new business opportunities. It will also facilitate increased quality and trust through common standards, data, resilience and strengthened security.