Insurers hesitating about blockchain investments should definitely get into the game, but keep their expectations reasonable and measured, according to a recent panel of experts who spoke at the Global Insurance Forum in Berlin about their own experience with the technology.
“Blockchain is not mysterious. It won’t fix all your problems. It is not ‘one size fits all,'” said panelist Charles Stewart, head of Strategy and Planning, GB, Willis Towers Watson.
Insurers have heard for a while now about the game-changing potential of blockchain – technology enabling synchronized, shared, secure databases. Also known as distributed ledger technology, insurers see blockchain as a way to save substantial sums of money by automating back-end processes, boosting efficiencies in the process.
During the July 10 panel discussion, panelists spoke first-hand about their blockchain experiences. Most were involved with a new marine blockchain known as Insurwave, which was launched in May and built by EY and blockchain developer Guardtime. A.P, Møller-Maersk, Microsoft and insurance partners Willis Towers Watson, XL Catlin, MS Amlin and ACORD also took part in the project.
What It Takes
Moderator Shaun Crawford, Global Vice Chair, Industry, EY, cautioned that any company considering a blockchain product would need people who are “business architects,” individuals who understand the insurance industry and could break down in detail what a blockchain project is supposed to achieve through use of big data and other new technologies.
“You’ve got to be strategic about how you think about deploying the technology,” cautioned Madeline Bailey, Global Head of Strategic Initiatives, MS Amlin.
Panelist Helene Stanway, Digital Leader, XL Catlin, said that being strategic with blockchain means rethinking the supply chain from top to bottom with technology thoughtfully woven in.
“One of the industry challenges is to have a look at what our supply chain looks like from a point-by-point perspective,” Stanway said. “We didn’t just look at how things are done today and stick a bit of tech at the top. We spent a lot of time reimagining what an insurance transaction should look like.”
To create a blockchain system, Stanway offered that an executive should “be generally curious and park your ego.”
Clear Objectives, and Working Quietly
Panelist Patrick Schmid is vice president of RiskBlock Alliance at The Institutes, a consortium of major insurers and reinsurers devoted to developing applications for blockchain technology. He said that forming a defined network of participants is key, because if successful, it removes the need for intermediaries and all relevant parties can potentially share data through the blockchain “smart ledger” setup.
“For RiskBlock Alliance, we have zoned in on the network. We feel that is important,” Schmid said. “Leveraging blockchain, we are planning on trying to establish a network that involves a lot of participants, both in the P/C space but also the life and annuity space. We will start with an initial platform but feel it is important to not choose one platform for the industry.”
Stewart, at Willis Towers Watson, said his company did not widely publicize the blockchain project, in order to iron out the kinks and develop a smoothly-running plan.
“We deliberately did not go long on publicizing the blockchain,” Stewart said. “We went in specifically and quietly, I suppose, to do a piece of work with Maersk.” Stewart said the goal was to have the minimum number of people, committees and paperwork involved.
“If you started small as we did two years ago, at some point you have got to change gears to enterprise and scale,” Stewart said. “It’s better to do that a little later. You start small and do the paperwork only when you have to.”
Room for Many Blockchain Members
Stanway said the blockchain Maersk is a part of is built for growth and expansion over time.
“We did not build this platform for just one client,” she said. “We are actively talking to other clients to onboard.”
In that regard, Stanway said that the initial launch with Maersk was a success.
“This was the very first time a gentlemen from Maersk said he felt listened to by the insurance industry,” she said. “It showed we can better serve insurers by this approach. We want other people to come on board.”
Stanway said she is also hearing from other clients with blockchain systems that they are making huge strides.
“They can start their purchasing process five months ahead of renewal [with blockchain], she said. “It takes that pain away …. You have a singular list of assets and do that once and it just updates.”