In my first post in this series, I set out the scene for blockchain’s growing relevance for personal lines P&C insurers. This time, I’ll examine how blockchain can bring new levels of efficiency into P&C insurance by embedding trust into transactions. This is an opportunity for an industry that has lagged in adoption of digital technology to fast-track digitization and begin reaping its rewards.

Today, too many parts of the insurance value chain continue to depend heavily on manual processes. Manual processing and reconciliation mean that insurers’ cost bases remain needlessly high. What’s more, they result in unnecessary losses as a result of fraud and error, and create friction in the customer experience due to delays in processes such as renewals and claims pay-outs.

Most manual processes exist because of a lack of trust between contracting parties. In the absence of end-to-end transaction transparency, the parties in an insurance contract or transaction depend on intermediaries such as brokers to create trust. This model is supplemented by the regulatory framework.

Recording, verifying and tracking assets, records, and agreements depend heavily on human intervention. Because parties maintain different records and databases, updating them at different times, there is no golden record of the truth. There is no single standard in the market that promises to address this challenge, besides blockchain and the growing momentum it is building.

Blockchain provides a consistent and uniform way for insurers to record and validate transactions, giving a single source of the truth that is updated in real- or near-real time. It uses cryptography and a distributed messaging protocol to create a distributed, or shared, ledger between transaction counterparties.

Blockchain a new building block for transparency - single source data across broker-insurer value chain


This allows the parties to maintain comprehensive asset, contract and data ownership records without having physical possession or relying on paper or intermediaries. This, in turn, means that outcomes are more certain because there is less room for contract interpretation or information discontinuities.

Furthermore, it can help accelerate claims settlement and reduce processing costs. And the auditability, immutability and security of the blockchain reduces space for fraud, error or disputes. Here are some basic uses cases we can see for blockchain in the P&C industry:

  • A single referenceable source of data: Parties in a contract can record and verify balances and transactions in one trusted system—including premium collection, agent commissions, servicing records, collision records, claims payment authorization, and reinsurance data transmission. P&C insurers will benefit from instant visibility of their placements, exposure and agency channel effectiveness.
  • Customer digital wallets: Insurers can keep a digital record of customer transactions and claims, enabling more efficient servicing and data analytics.

This is just a start, however. My next post looks at how blockchain and smart contracts elevate automation by digitizing processes right across the P&C insurance value chain.

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