What’s next for blockchain? While parts of the insurance industry are experimenting with the technology, the hype around blockchain and the necessity of collaboration has slowed widespread adoption
OF ALL THE technologies that have the potential to transform the insurance industry, blockchain might be one of the most hyped – but that hasn’t necessarily translated into widespread adoption by insurance companies. “The hype around blockchain is that it will solve everything under the sun … and I think that impedes some adoption because people are going into blockchain with high expectations,” says Bijesh Jacob, senior vice president of technology and standards for ACORD Solutions Group. Compared to a technology like artificial intelligence, which has already had a
Part of the problem is the fact that, as a technology that allows data to be stored in a distributed ledger to which several stakeholders have secure access, blockchain is underpinned by a reliance on other organizations. It’s a tool that enables collaboration between parties and will play a crucial part in managing business relationships – but its very nature means a single company can’t be the first and only mover on this technology. Contrast that with AI, where “you don’t really need any other market participants to be part of your investment in that space – you get benefit just by investing yourself and doing things within your four walls,”
“I think people are watching some of the more public [use cases] that are out there … to see how [they] take off ” David Bassi, EY noticeable impact on the insurance industry (Accenture reported in 2018 that 80% of insurance leaders believe they’ll have AI integrated into their operations in the next two years), the implementation of blockchain has not happened as smoothly or swiftly.
says David Bassi, executive director at EY. “Blockchain does require those connection points between multiple players.” He highlights its use in the shipping industry to track the locations and routes of ships for multiple parties, including shippers
and insurers. However, that lengthens the adoption curve because other players have to connect in order to make blockchain valuable. Insurance organizations are making progress in blockchain adoption by exploring use cases for the technology. ACORD, for instance, has been involved in multiple blockchain initiatives over the past few years and recently formed a group to review and propose common standards for the adoption of blockchain capabilities within the insurance industry. EY is also walking the walk, recently announcing that it will be the primary service provider in blockchain-related cybersecurity and risk management guidance for The Institutes’ RiskBlock Alliance, the first blockchain consortium for the risk management and insurance industry. This collaboration will help RiskBlock Alliance identify the risks unique to its blockchain and practice controls, as well as provide blockchain-specific cyber security assessments and testing.
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