• GlobalData gathered views on blockchain from insurance industry executives
• A third of insurers consider blockchain to be less promising than it was a year ago
• Experts nevertheless see a future for the blockchain in the insurance industry – the advantages are immense
R3i announced at the end of July that it had filed for bankruptcy
“Because smart contracts are immutable on a blockchain, any specific encoding required for protections must be considered upfront. However, it will not be long before smart contracts become indispensable in insurance, and consumers can benefit from the In fact, expect insurance providers to provide user-friendly portals that can resolve claims more efficiently and enable faster payouts for predefined triggers.” In March, the insurance magazine Risk&Insurance quoted Benjamin Peach from Aon with these words. In the same article, Patrick Schmid from RiskStream also has his say: “The insurance industry is no longer sitting on the sidelines.” RiskStream is part of the Blockchain Insurance Industry Initiative (R3i), which confirmed it had filed for bankruptcy in July. As of August 2022, the optimism of the two experts does not seem to have borne any fruit.
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More than a fifth of insurers consider blockchain to be “hype without substance”
Not all insurers are as enthusiastic about blockchain as Peach and Schmid. Insurance News, citing a recent GlobalData survey, reports that 21 percent of insurance industry executives believe blockchain is “hype without substance” and unsure of the potential behind it. A third of those surveyed stated that they had a worse image of the blockchain than they had a year ago. The crypto crash in spring is likely to have contributed to this – and the recently filed insolvency of B3i, to which large companies such as Munich Re and Allianz belonged. Founded in 2016, B3i has been working towards bringing blockchain to the insurance industry. Now the merger had to file for bankruptcy under Swiss law because too few investors supported the project. GlobalData survey respondents indicated that augmented reality, Internet of Things, 5G, cloud computing, cybersecurity, and artificial intelligence were more important to the insurance industry than blockchain.
Blockchain is already being used in some areas
But that doesn’t mean the insurance industry has completely abandoned blockchain. Analyst Benjamin Hatton told Insurance News, “As regulation is phased in and strengthened, some companies may gain the confidence in blockchain they need to rethink the capabilities of the technology. Although blockchain and distributed ledger technology are very… complex, they are being used more and more in the insurance industry – particularly in parametric catastrophe insurance.” Many still associate the blockchain far too much with cryptocurrencies and do not really understand the much more extensive further possibilities for the industry.
If used, blockchain could improve efficiency and fraud protection
McKinsey already explained these possibilities in a 2016 report. “So far, banking in particular has discovered blockchain for itself. However, the technology also offers potential applications for insurers, for example in improving insurance products,” it says. For example, protection against fraud could be strengthened, administrative costs reduced and efficiency increased in various areas. Insurers would only have to deal with the scalability of the blockchain, security and standardization. And Munich Re also explains on its website that the blockchain could be an asset for a wide variety of insurers. For example, working with the technology in the health sector or in life insurance is conceivable.
Olga Rogler / Editor finanzen.net
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