Blockchain Standards Must Be Implemented For The Entire Insurance Industry

Blockchain, Investing, Regulation | July 30, 2018 By:

In an attempt to modernize the industry, insurance companies are in the process of exploring the many benefits that blockchain technology brings. It is hoped that in the medium-to-long term, both internal and external processes can be streamlined in to one decentralized system, vastly improving efficiency levels and of course, reducing fees.

According to a recent publication by IBM, the introduction of blockchain and smart contract technology has the potential to alleviate outdated systems, which is one of the main driving forces behind the inefficiencies experienced within the insurance industry. As a result it will make it far easier to share and distribute data, improve security and anti-fraud practices and vastly reduce the reliance of labor intensive offline paperwork.

For example, AXA France are looking to merge the blockchain protocol in to their current processes to offer automated travel insurance. Moreover, in the health industry, providers such as MetLife Asia Pacific are looking to explore the blockchain to support their coverage against diabetes. Then we have recent startup Kasko2go, who aim to revolutionize the car insurance sector through the use of both artificial intelligence and blockchain technology.

In fact, there is an endless list of both new and existing insurance providers that fully recognize the many benefits of the blockchain protocol and as such, are spending millions of dollar in research and development. However, here lies the problem. If each and every individual insurer and reinsurer were to explore the potentialities of using their own blockchain, won’t we simply be back to square one?

The second issue that organization-by-organization research and development will create is that if left alone, sceptics would argue that any monetary savings that the blockchain brings will not be passed on to the consumer. After all, cost cutting is an infinite exercise in the private sector, with the customer very rarely seeing any of the benefits.

If the insurance industry instead streamlined their activities through decentralized  eco-systems then the entire process would be available for all to see on the transparent public ledger. The benefits don’t stop there, as the underlying smart contract protocol ensures that all pre-defined terms and conditions are set in stone – i.e, they cannot be amended or altered, nor can they be skirted by shady insurers.

What the industry as whole needs is a decentralized platform for the entire insurance eco-system. This includes both the insurer and insurance provider, as well as those in between such as distributors and re-insurers. This is what we are trying to build at – but there are other great initiatives out there with very talented teams and equity philanthropic missions. It’s not about us, it about delivering the right insurance to people in a transparent and honest way.

Critics may question how the industry would collectively choose a singular Insuretech platform for all of their operational needs. We recognised this potential concern well in advance, by forming a close relationship with our national regular. The jurisdiction’s Central Bank – the Monetary Authority of Singapore (MAS), hold regular meetings with us to ensure that we are fully aware of both their legislative and regulatory responsibilities. This ensures that the platform has oversight at the highest level.

Ultimately, insurance companies should now reconsider their position. Whilst it is notable that the industry is looking to transition their business models in to the modern age, it must be questioned why they are taking such a singular route to success. Why waste millions of dollars building a tailor made network that cannot be streamlined by other stakeholders?

The most sensible solution is to utilize the blockchain technology of a decentralized platform that is ready to service everyone. This doesn’t just include the companies themselves, but the most important part of the end-to-end insurance supply chain – the consumer.

Otbert de Jong is Co-founder and CEO of Inmediate – the smart insurance platform. He has been a pivotal figure in the Asian finance and insurance scene for decades – first as a consultant and more recently as the co-founder of insurtech online broker Insurance Market. He is passionate about making insurance more readily available in a simple, reliable, cheap and transparent way to anyone, not bound by place or time.