Other parts of this series:
Insurance leaders are winning with blockchain through teamwork. This breakthrough has changed the industry playbook and here’s why.
Since its early years, distributed ledger technology (DLT)—and specifically, blockchain—has been on the insurance industry’s radar as a potentially transformative tool for core processes and business models. I speak with clients about blockchain on a regular basis. And Accenture research found that more than 80 percent of executives reported that their companies have either adopted or plan to adopt DLT across one or more business units.
Pilots and proofs of concept (POCs) have shown varying levels of success, but until recently, firms were uncertain on how to realize return on investment in production. Until now.
Leading insurance organizations are now seeing blockchain’s true value as a catalyst for business ecosystem transformation. That transformation requires companies to work together to create value. In short: teamwork is what makes the blockchain dream work.
A quick blockchain clarification
Before I dive into teamwork, let me first dispel the common misconception that blockchain is simply bitcoin. Bitcoin operates on blockchain, but blockchain has a much wider applicability—for business in particular. (Interestingly, bitcoin insurance is an emerging market that I’m sure we will connect on soon.)
To accurately and simply define blockchain, I’ve pulled from the Accenture Ultimate Guide to Blockchain for Insurance:
Blockchain is a distributed database system in which transactions and records can be signed, exchanged and verified without the control of a central party. With its three fundamentals—trust, transparency and immutability—blockchain provides a single source of the truth that is updated in real or near-real time. The result is a more connected ecosystem that ensures confidence in the security and accuracy of the data.
In short, blockchain is an ideal tool for insurance, an industry in need of more efficiency, as well as consistency, security and privacy of data in an ever-evolving digital landscape. Which brings me back to the breakthrough.
Break through blockchain barriers with teamwork
As with any implementation, it’s not the technology that creates the value, but how it is implemented. First, we need to see blockchain and other DLT as a foundational technology, rather than a standalone solution. Second, we need to be open to finding partners who share the same vision. That shared vision is what can take pilots and POCs to production. (DLT is itself a member of a mighty team, along with artificial intelligence, extended reality and quantum computing—DARQ Power—so it’s fitting that the key to its success lies with teamwork.)
Two teamwork models have developed in the last few years, each with a unique way to shepherd efficiency over competitive advantage for blockchain value and ecosystem creation: market leaders and peer networks.
This model sees one company as the team captain or driver of network activity. A market leader spearheads the development and deployment of the DLT solution. It also maintains and drives efficiencies across a network of internal or business partners and customers.
For example, Generali Employee Benefits (GEB) has emerged as a market leader. It has used blockchain to facilitate stakeholders to exchange different assets such as data, information or employee benefits risks. GEB recently demonstrated a blockchain prototype involving two global clients and local European insurers. The demo showed how the platform could enhance efficiency through collaboration, as well as reduce costs, save time and improve data quality.
Peer networks are efficient and create value across industries and markets. This model sees means competitors working together in collaboration or “co-opetition” versus a competition. I see this as a solid option for most insurance companies looking to implement blockchain as peer networks create industry- and market-wide efficiency and value.
Examples of these networks are The Institutes RiskStream Collaborative™, Blockchain Insurance Industry Initiative (B3i), and Insurwave. The Collaborative, in particular, is structured to give each member a voice and prevent larger players from over-influencing. The aim is to ensure that DLT benefits the industry at the points where its value and impact will be greatest.
Two use initial use cases for proof of insurance and first notice of loss have already identified between $99 million and $277 million in annual savings for personal automotive lines of insurance in the US alone by the third year of use.
To quote a pioneer of teamwork:
“Coming together is a beginning. Keeping together is progress. Working together is success.”
– Henry Ford
Ultimately, the way to win and create value with blockchain is to pick a team. But does your organization actually need blockchain right now? I’ll explore that loaded question in my next post. In the meantime, click here for more insight on the blockchain breakthrough for insurance or connect with me directly here.