Other parts of this series:
Blockchain could become as important for commercial insurance brokers as the arrival of the internet.
With the advent of blockchain, commercial insurance brokers face the prospect of profound disruption in how they operate. Over the course of this series of blog posts, I’ll look at why blockchain arguably represents one of the largest changes in the sector in centuries, as well as why commercial brokers should adopt blockchain technologies and how they can get started.
The principles of commercial insurance broking and the role that trust plays have not changed much since the origin of the industry in 17th century. However, we are seeing growing recognition among insurance brokers and carriers that blockchain—and related digital technologies like smart contracts—could change the game.
Indeed, we’re seeing perceptions of blockchain shift from yet another fad to a technology that could be as important for commercial insurance brokers as the arrival of the internet. With the insurtech revolution gaining momentum, blockchain-enabled products and services are emerging around the world.
Key players across all industries, from financial services to resources, are moving quickly to collaborate and establish partnerships to develop blockchain-enabled opportunities. As of Q1 2016, total venture capital investment in bitcoin and blockchain start-ups exceeded $1.1 billion.
Accenture is positioning itself to support clients implementing blockchain applications. It has launched a specialized blockchain practice within its financial services group and opened a center of excellence in France to focus on this emerging technology. Furthermore, Accenture recently partnered, and invested in, blockchain payments pioneer Ripple and formed an alliance with blockchain financial solutions firm Digital Asset Holdings. Accenture is also a member of the Linux Foundation’s Hyperledger project, a consortium of technology providers that is promoting the use of blockchain-based distributed ledgers for recording and verifying business transactions. Earlier this month, Accenture announced a major blockchain innovation, an “editable” blockchain, that will help financial institutions implement solutions that incorporate this technology.
Blockchain is most commonly recognized as the enabling technology for cryptocurrencies such as Bitcoin, and decentralized platforms such as Ethereum. It is a secure transaction-ledger database, shared by all parties participating in a collective network that is updated through an infinite number of “blocks”.
Using contemporary cryptographic logic, it verifies and stores every transaction that occurs between networks of counterparties. Thus, blockchain technology can create a secure yet open means of conducting business transactions. For brokers, the potential of blockchain becomes truly exciting when it is combined with other innovative technologies such as smart contracts.
These automated contracts enable the programmable exchange and execution of transactions in a controlled and secure way. The result is a blockchain-enabled smart contract which can securely compute and record transactions in a distributed ledger, allowing for automatic verification and collective agreement between parties.
This creates a new way for the parties in an insurance contract to create trust—a topic I’ll examine in my next post where I’ll also discuss Accenture’s new “editable” blockchain innovation. To learn more in the meantime, download this report: Using blockchain to get ahead of the game.