• GlobalData collected opinions on blockchain from insurance industry executives
• A third of insurers see blockchain as less promising than a year ago
• Experts nevertheless see a future for blockchain in the insurance sector – the benefits 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 in advance. However, it won’t be long before smart contracts become indispensable in insurance, and In fact, expect insurers to provide user-friendly portals that can resolve claims more efficiently and enable faster payouts for predefined triggers.” In March, insurance magazine Risk&Insurance quoted Aon’s Benjamin Peach with these words. In the same article, Patrick Schmid of RiskStream also has his say: “The insurance industry is no longer on the sidelines. RiskStream is part of the Blockchain Insurance Industry Initiative (R3i), which confirmed that it filed for bankruptcy in July. In August 2022, the optimism of the two experts does not seem to have borne fruit.
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More than a fifth of insurers see blockchain as “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% of insurance industry executives think blockchain is “hype without substance” and are unsure of the potential behind it. A third of respondents said they have a worse image of blockchain than a year ago. The spring crypto crash may have contributed to this – and the recently filed insolvency of B3i, which owned big companies such as Munich Re and Allianz. Founded in 2016, B3i is working to bring blockchain to the insurance industry. Now the merger had to file for bankruptcy under Swiss law because too few investors backed the project. Respondents to the GlobalData survey 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 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 gradually put in place and tightened, some companies may gain the trust in blockchain they need to reconsider what the technology can do. Although blockchain and distributed ledger technology are very … complex, they are increasingly being used in the insurance industry – particularly in parametric catastrophe insurance.” Many still associate blockchain too much with cryptocurrencies and don’t really understand the much larger additional possibilities for the industry.
If used, blockchain could improve efficiency and fraud protection
McKinsey previously explained these possibilities in a 2016 report. “So far, the bank in particular has discovered blockchain on its own. However, the technology also offers potential applications for insurers, for example to improve products insurance,” he said. For example, fraud protection could be strengthened, administrative costs reduced and efficiency increased in various areas. Insurers would only have to deal with blockchain scalability, security, and standardization. And Munich Re also explains on its website that blockchain could be an asset for a wide variety of insurers. For example, working with technology in the health or life insurance sector is possible.
Olga Rogler / Editor finanzen.net
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