Other parts of this series:
Models for successful DLT collaboration across the insurance ecosystem
As I’ve argued throughout this series of blog posts, DLT is a team sport. That means its real value will come not just from the technology but also come from the ability of insurance companies across complex ecosystems to align behind shared economic incentives and robust governance structures.
DLT implementations most often make sense as joint efforts between business partners in intermediated markets or in extended supply chains that are seeking to alleviate shared pain points. For instance, companies can automate large-scale, manual reconciliation operations that span enterprise borders—examples are claims resolution in personal lines, or premium management and settlement processing in commercial lines.
It is only by working together to determine how their market may benefit from an industry-wide solution, and how to share the costs of ideation and development, that insurance organizations can uncover the true value of DLT. Two major models are emerging for this form of cross-industry collaboration:
This model sees an actor that is a predominant driver of network activity leading the development and deployment of the DLT solution. Such an organization is in a powerful position to maintain and drive efficiencies across the network, which may include its business partners and customers.
One example is a blockchain-based solution developed by Accenture and Zurich Benelux to help the insurer’s customers in Benelux manage surety bonds. The solution includes an easy-to-use dashboard that enables customers to quickly check the status of their bonds, get detailed bond history records, complete new bond requests and view bond forecasts.
The vision is to enable additional stakeholders—such as notaries, brokers, reinsurers and co-surety partners in the insurance market—to interact with each other, creating a more-connected ecosystem while ensuring confidence in the security and accuracy of the data.
This model sees organizations—often competitors in a similar industry—come together to realize efficiency and value gains at a market-wide level. The Institutes RiskStream Collaborative and B3i are examples of insurance consortiums bringing together players to realize value from DLT.
These two consortiums show that the model can be flexible enough to accommodate the needs of large and small players alike. The initial emphasis is on creating a step change in efficiency for the entire value chain or market, rather than driving competitive advantage for one participant. As more parties come on board, the benefits to all will multiply.
Fair outcomes for all
Whether seeking to lead a new consortium or to build a network with their peers, insurance organizations must establish a structure and incentives that ensure fair and positive outcomes for all stakeholders. Their governance structures and technology stacks should be designed for the long haul. Companies should leverage or build technology that can scale well and efficiently bring together small and large businesses behind a common set of interests.
Whichever route an insurer decides to take, now is the time to act. As with the World Wide Web and cloud computing before it, DLT promises to bring radical change to how entire industries operate. Insurance organizations must take a stance on how they expect DLT to impact their business and the wider industry. By understanding the technology and its applications, they can assess the challenges and benefits that loom on the horizon.
You can register to read The blockchain breakthrough in insurance to learn more.