Blockchain technology has brought a newer, exciting dimension to the way businesses operate with a plethora of use cases built around transparent data sharing, immutable cryptographic record keeping, decentralization, consensus-based authentication, and smart contract-based decisioning. Most of the industries are trying their hands on Blockchain prototypes and POCs. A handful of these POCs are also becoming successful and are going into production. Among all these industries, insurance, in particular, has a vast potential for Blockchain-driven innovations solving multiple pain points across the insurance value chain, owing to its reliance on disparate systems involving multiple participants with a high scope of data sharing.
The application of Blockchain in insurance ranges from fraud detection during claims, smart underwriting & digital-first policy administration, record keeping, automated codified payouts, etc. While a lot of InsurTech startups are now leveraging Blockchain along with other modern technologies (such as AI & IoT), the industry has also seen an emergence of several consortiums and industry collaborations where these incumbents have come together to explore the use of Blockchain in insurance. A key example of such consortiums is B3i – a Blockchain industry initiative which is a collaborative initiative of 15 global insurers coming together to explore and test the potential of Blockchain in the industry. The consortium has recently announced the incorporation of a company called ‘B3i Services.’ Another example is RiskBlock, which has over 30 key insurers as members.
Furthermore, it is interesting to see many large insurance incumbents come forward to adapt Blockchain technology in various capacities. For example:
AXA has launched a new product called Fizzy, which uses Ethereum-based smart contracts and real-time air traffic data to process automated payouts for flight delay insurance.
InsureWave, the first Blockchain-powered marine insurance, was recently launched by EY and Guardtime in collaboration with Willis Towers Watson, XL Catlin, MS Amlin, and ACORD.
China Life and the Macau branch of Guangfa Bank have implemented a Blockchain-based platform for selling bancassurance and settling payments across borders.
Bajaj Allianz has deployed Blockchain to speed up the claims settlement process, which has enabled them to bring down the settlement time for some plans from days to minutes.
The corporate and specialty insurance wing of Allianz has prototyped captive insurance on Blockchain. The prototype automatically connects all the parties involved in this vast captive insurance network, from local subsidiaries and fronting insurers to the captive owner’s management. Transactions or data updates are shared across the whole network in real time and automated processing is used in place of the exchange of thousands of emails and massive data files.
To understand the Blockchain innovation landscape in the insurance space, MEDICI analyzed the Blockchain projects and prototypes by 27 large insurance incumbents around the world and identified some of the predominant Blockchain use cases and areas of applications in the insurance world. Policy administration and automated payout – with 30.3% and 21.2% of Blockchain projects respectively – were found to be the biggest area where incumbents are using Blockchain. Claims management/verification, new product/platform development, and record keeping were the other key areas where insurance incumbents are developing Blockchain applications.