Other parts of this series:
As insurers join increasingly complex ecosystems, many will look to blockchain to develop frictionless relationships with their ecosystem partners. As an immutable ledger with the capability to automate transactions between organizations and customers, blockchain can act as a trust surrogate to traditional partnerships.
Accenture's Technology Vision for Insurance 2018 report shows 38 percent of insurers work with double or more partners than they did two years ago. Incumbents are collaborating with insurtech startups, reinventing services and finding new distribution opportunities. They’re working with autonomous vehicle operators, connected home technology companies, and massive platform companies to increase their reach and create the seamless customer experiences many consumers now expect.
How does blockchain fit into this evolution? Subtly. Blockchain technology—smart contracts, in particular—can help insurers fulfill contracts and settle claims without the need for lots of paperwork, meetings, and manual processes. All parties must agree to a contract’s terms, and when a claim has been made or the contract has been triggered in another way, settlements and other processes will occur automatically.
Let’s look at how that can work in the case of a car accident. Currently, it’s up to the customer to coordinate vehicle repairs after an accident. She must coordinate between the repair shop, an adjuster, and her insurance carrier. Using blockchain, she could report the accident through a portal on her smartphone, receive a list of approved repair shops, select one and schedule a drop-off or tow. Her insurer can generate an automated estimate while the repair shop does its work, uploading the required documentation and correspondence to the blockchain to prove the repair is complete. Then the insurer securely disperses funds to the appropriate parties. The result is a much more seamless process that requires less from the customer, who may be dealing with injuries and other issues as a result of the accident.
Blockchain consortiums such as B3i, formed by several organizations including Aegon, Allianz, Munich Re, Swiss Re and Zurich, are piloting ecosystem solutions, aiming to develop standards and processes for industry-wide usage. ChainThat and SCOR reinsurance have also completed a proof-of-concept for a platform that will allow brokers and reinsurers to negotiate, create and manage placement terms when a new risk contract is being placed in a market.
The major thing holding insurers back from enabling blockchain-powered partnerships is their legacy systems. Outdated systems and architecture cause organizations to work in siloes. They will need to become more flexible to adapt to continuing changes in partnership architecture. I’ll explore this, and how to begin the journey to enabling blockchain, in my next post.
Further reading:Technology Vision for Insurance 2018 Unblocking Blockchain