Blockchain technology will have a variety of applications that will be disruptive to the insurance industry, according to Abizer Rangwala, Managing Director of Accenture’s Insurance IT Strategy.
Insurance is gaining momentum in the use of blockchain and slowly figuring out the true business use or to some degree what the use case should be. I have no doubt that within the next few years it will be a major technology in the insurance ecosystem.
Rangwala believes that such applications of blockchain tech could permit companies to issue and trade digital assets, reduce health insurance fraud and settle claims, enable offering of insurance products that reflect actual risk, facilitate creation of large layered commercial insurance programs, lead to the development of peer-to-peer social insurance mechanisms that bypass insurers, and simplify the entire process of buying a new house.
He notes that the blockchain’s characteristics present “real advantages” that include the security of a distributed database, transparency in every transaction, deals that are more direct, and the efficiency of frictionless transactions and smart contracts.
In 2015, it became evident that global insurance industry was beginning to take blockchain tech seriously. In December, German insurance giant Allianz inducted Everledger, the developer of a distributed ledger for fraud detection and diamond certification, into its French startup accelerator.
Lloyds, a key member of the London insurance market, demonstrated keen interest in how blockchain tech could improve the way risk is evaluated by the industry, both in terms of transparency and accuracy. The group, which held an important seminar on the topic in November, sees potential of distributed ledger tech enhancing the new target operating model for the London market, known as TOM.
There was already some impetus for understanding blockchain’s potential disruption on the insurance sector after research group Long Finance, in December 2014, published a report titled “Chain Of A Lifetime: How Blockchain Technology Might Transform Personal Insurance” written Professor Michael Mainelli and Chiara von Gunten.