Other parts of this series:
There's lot to consider, but here's where to start
The insurance industry has been in a period of rapid change, and the adoption of blockchain is going to further alter many aspects of the insurance business. Blockchain has the potential to make claims and transactions more efficient and transparent and, as part of ecosystem of solutions, it can help address industry-specific challenges. It is hard to overemphasize that carriers that hope to be a part of the future of insurance must be ready to move fast to develop a strategy to explore and engage with blockchain technology.
When they target blockchain engagement, organizations should consider a number of different elements:
- Geography: As blockchain is scaled, cross-border solutions will become increasingly complex with considerations such as regulation, currency exchange, business practices, and macro-economic influences.
- Regulatory: Regulation of blockchain solutions is, and will likely remain, an ever-evolving issue. A robust regulatory and compliance program will be key to the successful implementation and scaling of blockchain solutions.
- Complexity: The benefits associated with more advanced blockchain solutions must be weighed against the effort of creating them. Additional participants, increased transaction load, security and integrations lead to more complexity, cost and risk.
- Investment: As the scale and complexity of blockchain solutions grow, investment and return on investment (ROI) will be subject to increased scrutiny. A carrier looking to grow its blockchain capability must select the best investment option: self-driven research, an acquisition, a joint-venture or even a subscription.
- Risk: With all new and developing technologies, the risks associated with utilization shift as the technology matures. Blockchain is no different. Each company must weigh the risks posed by blockchain to individual and/or corporate privacy, cybersecurity, and even financial loss to consumers and investors.
- Speed to market: As blockchain becomes mainstream, speed to market will be key to attaining the greatest benefits. Potential solutions offer broad applicability, and organizations that can quickly identify, develop and roll out these solutions will derive the most benefit.
That’s a lot to consider. Meanwhile, preparing to engage with blockchain to fundamentally transform processes and business models requires a strategy.
We suggest a three- year approach:
- Discover: 0-6 months. Form a blockchain advocacy group consisting of senior leaders within the organization’s technology and business divisions. This group will consult with stakeholders and experts, as well as educate and connect relevant parties from technology and business. Not only will it help gain buy-in, but it will apply its clear understanding of the organization’s strategic goals to identify potential use cases.
- Explore: 1 year. Explore the feasibility of opportunities within the organization and with business partners. Collaborate and test out use cases and prototypes within a closed group, maintaining strict governance over data. Assess and create a business case for blockchain.
- Assess and scale: 3 years. Assess the impact of blockchain on the industry’s core business, and review how it may affect doing business with existing partners across the value chain. Develop a comprehensive roadmap and strict timelines to scale the technology and integrate it into core systems. Also, identify partners and ecosystems that will enable the organization to achieve the network effect.
Beyond putting blockchain projects into place, the goal is to become a ‘blockchain native,’ the equivalent of a ‘digital native,’ establishing and using blockchain technology as a standard technology for IT development.
Insurers that move now to become blockchain-ready will be among the first to benefit when the technology becomes mainstream.
Please contact me [link] to explore how blockchain can benefit your organization and to help shape a blockchain engagement strategy that meets your needs.
Meanwhile, don’t miss the earlier blog posts is this series:
- Insurers are unblocking blockchain, preparing for the future
- Insurers: Take your marks for the fast-moving blockchain race
And for further reading on this topic, read Unblocking blockchain: Unlocking the value of distributed ledger technology for insurers.