Every emerging technology has its naysayers, who can be very accomplished in their field and still end up being wrong. For example, columnist and economist Paul Krugman once opined on the Internet’s future, stating: “Most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.” Executive SummaryEvery new technology poses some risks, says Patrick Schmid of The Institutes, who is optimistic about the potential of blockchain and distributed ledger technology to enable fundamental improvements in the industry’s business efficiencies.
Similar skepticism has developed around the blockchain, a distributed database and ledger that maintains a growing list of digital records.
The blockchain has the potential to redefine business operations and help the insurance industry overcome many of its current challenges. The decentralized consensus process associated with blockchain removes the need for intermediary verification and could dramatically lower industry costs. The ability to use smart contracts—programmable code that can be written into a blockchain and self-execute—extends potential applications and makes automating large chunks of business processes more practical. Yet many are still skeptical of this emerging area and its growing impact on the insurance industry.