Other parts of this series:
From geography to risk, and speed to market, insurers considering embarking on a blockchain journey need to think about these six things.
In my previous post I shared three models for generating value from blockchain technology—intra-carrier, inter-carrier and ecosystem. But for a truly targeted blockchain engagement, there are a number of other things for insurers to consider.
Blockchain solutions which cross jurisdiction, state and national boundaries will have varying requirements for legal and regulatory compliance. As blockchain is scaled across borders, solutions will become increasingly complex. Insurers will need to think about regulation, currency exchange, business practices and macro-economic influences.
Regulation of blockchain solutions is likely to remain an ever-evolving issue. Compliance with the numerous Departments of Insurance, state and federal agencies, and regulations will remain a challenge as blockchain scales up and expands use-areas. A robust regulatory and compliance program will be critical to the successful implementation and scaling of blockchain solutions for insurers.
Complex use cases and intricate ecosystems demand advanced solutions. Additional participants, increased transaction load, security and integrations lead to more complexity, cost and risk. The benefit associated with more advanced blockchain solutions must be weighed against the effort of creating them.
As the scale and complexity of blockchain solutions grow, investment and ROI will be subject to increasing scrutiny. There are several options for investing in blockchain solutions due to their current development by both carriers and third parties. An insurer looking to grow a blockchain capability must select the best investment option, be it self-driven research or an acquisition, a joint-venture or even a subscription.
With all new and developing technologies, the risks associated with using them shift as the technology matures. Blockchain is no exception. Risks to individual and/or corporate privacy, cybersecurity and even financial loss to consumers and investors must be weighed. With appropriate consideration given to the potential risks, blockchain offers new solutions within acceptable risk levels.
6. Speed to market
Low levels of adoption will remain an impediment to the realization of the benefits of blockchain in the near term. However, as blockchain moves into the mainstream, speed to market will take its place as the key to attaining these benefits. With the broad applicability of potential solutions, the ability for these to be identified, developed and rolled-out quickly will drive the benefits.
The potential for value is great and the options varied. Leading insurers will make strategic decisions in these six areas.
In my next post in this series, I’ll examine four steps insurers can take to prepare for rapid blockchain adoption.
In the meantime, to learn more, register to download Unblocking Blockchain: Unlocking the Value of Distributed Ledger Technology for Insurers.