Blockchain technology in the insurance industry – must have or nice to have? This is the question that representatives of renowned insurance companies discussed with Søren L. Fog, CEO of iprotus GmbH, Richard F. Zbinden, partner at Software for Corporate Leaders LLC, and experts of AdNovum at the innovation forum held on 19 January 2017.
Blockchain technology is currently positioned as a miracle cure for many things. Until now, it has been mainly known in the financial industry as a basic concept for distributed ledger technologies (bitcoin, Ethereum, R3, etc.). It turns out that blockchain as a concept can be applied in very different industries, and that it can certainly create disruptive effects. Therefore, AdNovum invited representatives of the insurance industry to identify strategic use cases in a workshop together with experts of iprotus, Software for Corporate Leaders and AdNovum. The workshop was part of the annual innovation forum organized by AdNovum.
The workshop, organized as a blockchain café, focused on answering the following questions:
1. What are the major problems (cost pools, inefficiencies, etc.) of the insurance industry that are unsolved due to lack of confidence or collaboration?
Extensive research required to identify the beneficiary, i.e. to verify the damage claim, is still very time-consuming and thus one of the biggest pain points. Insurance fraud and the high distribution fees that are to be paid to brokers were among the other answers mentioned.
2. Which new business models (also across industries) have the potential to challenge the current providers and to transfer part of the value chain?
Answers included ad hoc insurance models with blockchain and IoT, crowd risk coverage and a platform/blockchain solution showing how cars are used.
3. Which role can the insurance industry play in the shared economy and what are the risks and opportunities involved?
One answer was the transformation from product to platform provider, while another mentioned the offer of having one's risk profile evaluated and improved. Participants also went on to suggest that the value chain will most likely further develop from a traditional product distribution approach to a modular network approach, with providers also being customers.
The results of the blockchain café show that no clear statement can be made yet on the further development of blockchain technology in the insurance sector. Blockchain technology seems to have the potential to change or challenge current business models. As a result, every provider will have to develop his/her own strategy in addition to the known industry-wide initiatives (B3i usw.). Building up knowledge and establishing partnerships with providers who have blockchain/smart contract implementation skills will be key in order to remain competitive, as the use of such technologies increases. The small number of experts in this field of technology will give first movers an additional boost regarding time to market.
AdNovum's innovation forum
The transfer of experience across industries is a proven method of innovation. This is why every year AdNovum organizes the innovation forum where new ideas, technologies or products are presented in an exclusive setting. Afterwards, attendants can delve deeper and discuss them during lunch at AdNovum's company restaurant.