One of the manifest qualities of blockchain technology is its ability to create trust in situations where it may not have previously been possible or cost effective. New models of trust, and thus reduction in risk represents a realm of opportunity for the insurance sector.
We sat down with Blockchain Live speaker Sylvain de Crom to find out more about the advantages of blockchain for the insurance sector. Sylvain is Head of Research & Development for Aegon‘s internal reinsurance company Blue Square Re. Sylvain and his team are keen on developing their business to further improve support to customers. They identified Blockchain as a technology that can revolutionize many parts of the insurance value chain and joined forces with Achmea, Ageas, Allianz, Generali, Hannover Re, Liberty Mutual, Munich Re, RGA, SCOR, Sompo Japan Nipponkoa Insurance, Swiss Re, Tokio Marine Holdings, XL Catlin and Zurich Insurance Group in the Blockchain insurance industry initiative (B3i). For B3i, Sylvain acts as product-owner for their first joint product.
Blockchain Live: As head of research you must come across a whole myriad of innovations, tell me where does blockchain fit in, is it similar to previous tech innovations?
Sylvain: We do indeed see many innovations, and some of these we expect to significantly impact our industry in the time to come. Blockchain is certainly one of those innovations. This does not mean that it is per se the most important or disruptive of all innovative technologies, but it gives us a technology that allows us to share data with our peers in a way that is technically secure and practically immutable. Essentially removing the need for a centrally trusted party to enforce the (historical) immutability by e.g. legal means. This means that for the first time in history we will be able to create, maintain and execute (smart) contracts in a distributed manner without the need for a centrally trusted party.
Blockchain Live: Does blockchain cross over with your other research areas, for instance blockchain and IoT?
Sylvain: Definitely, Blockchain will allow us to create, manage and execute our contracts in a fully digital fashion and will give us the complete history of these contracts coupled with very strong security. Many of our other focus areas also play out (partly) in the digital arena and we definitely expect some cross pollination in the future!
Blockchain Live: Regarding the B3I partnership, could you perhaps tell us why insurance is a prime market for cross organisational collaboration on blockchain projects?
Sylvain: The insurance and reinsurance market has two interesting components that make it extremely suitable for early adoption of Blockchain technology. Firstly it is a traditional market, with many customs and processes surviving the decades and sometimes centuries and secondly it is a large market with a limited number of players. The former gives many opportunities to find efficiency gains with new technology that allows you to rethink existing processes and the latter makes it very suitable for industry collaboration.
Blockchain Live: Could you tell us a little about some of the projects B3i are developing, will any be production-ready soon?
Sylvain: The Blockchain Insurance Industry Initiative B3i will present its newly developed prototype smart contract management system at the 2017 Monte Carlo RVS conference, where over the past 60 years, major players in the world of (re)insurance have exchanged ideas.
The prototype, which has been developed over the past 3 months, has the potential to radically simplify how the insurance industry does business. With this step, B3i members and the greater market are able to see how it all comes together. The system covers the major elements of the Property Cat XL reinsurance contract life cycle (i.e. smart contract setup, premium settlement and claim settlement).
Blockchain Live: The use of blockchain technology will bring a lot of benefits to various industries. What benefits does it have to insurers and how are these passed onto the consumer?
Sylvain: We work in insurance because we strongly believe in the value of helping our customers achieve a lifetime of financial security. All our research projects exist with the aim to improve the value proposition to our customers. In the case of Blockchain, it will allow the industry to become more efficient, which ultimately helps the customer as the key stakeholder in the insurance industry. It allows us to partly reinvest the effort that currently goes to processing, to supporting our customers better and, possibly even more importantly, to reach those people who do not currently benefit from any protection, helping them better manage their individual risks. On a more personal note, by working with the others in B3i, I found Blockchain to be a great way to bring people together to work towards a common goal.
You can hear all about Sylvain’s work, as well as discover more about the activities of B3i and the benefits of blockchain for insurance by catching his talk at Blockchain Live.
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