Blockchain: what future for insurance?

Blockchain, called blockchain in French, is the technology used by Bitcoin. It is a technology for storing and transmitting information, transparent and secure, which has become essential in the world of new technologies. The Blockchain is not governed by men but by technical protocols. It is therefore extremely reliable because each action and operation is verified by powerful algorithms before being validated.

How Blockchain Could Disrupt Insurance Practices

The Blockchain has demonstrated its strength, particularly in the field of banking and insurance thanks to Bitcoin. This automates a large part of the procedures, facilitates management, ensures transparency, and minimizes costs. This is because it is now more convenient and cheaper for a customer to transfer bitcoins rather than real money.

Smart Contracts:

The insurance sector remains attentive to one of the Blockchain applications called "Smart Contracts". They are stand-alone programs that automatically execute the terms and conditions of a contract, without requiring human intervention once started. The implementation of these could be revolutionized by the "Oracle" which would constitute a link between the Blockchain and the rest of the world. Indeed, the execution of an insurance contract requires elements external to the Blockchain which is blind. Oracle, which is a service responsible for the manual entry of data, will, for example, if the conditions are met, automatically trigger the payment of claims.

This advancement would not only allow insurers to reduce their management and structural costs but also speed up the settlement process and build customer loyalty. The first contracts that will be revolutionized by this technology are index or parametric. These are assurances that depend on quantifiable parameters such as the level of rain or temperature.

P2P Insurance:

Thanks to DAO, large-scale Peer to Peer (P2P) insurance could emerge and by allowing the management of complex rules between a large number of stakeholders. Traditional insurers, but also new players, could therefore position themselves more easily on this P2P insurance market, which is still embryonic and which is ultimately nothing more than an evolution of the principle of mutuality, the very foundation of the 'insurance.

Know Your Customer:

Another type of use that interests the insurance world concerns what is called KYC, a regulatory process that bankers and insurers must apply to limit the risks of fraud or money laundering. This type of use will give more freedom to customers. The mechanics would be to give each customer an identity in the form of a token on the Blockchain that could be passed from one organization to another.

Another interesting use case is that of the fight against fraud. The idea would be to share information concerning insureds on the Blockchain between insurers to detect attempted multi-insurance fraud, share an assessment note and history so that insurers can identify the profile.

Initiatives are taken by insurers

Insurers are showing more and more interest in Blockchain. They invest substantial budgets to try to be one step ahead and understand the impact of this technology on the insurance industry:

Several major players have already shown their interest in smart contracts, through partnerships. AXA Strategic Ventures thus participated in fundraising of 55 million dollars in the start-up Blockstream. This Startup is a specialist in Sidechains (blockchains underlying a blockchain), which allow applications that are inaccessible on the initial blockchain in a secure manner.

Experiments such as that of Allianz Risk Transfer which collaborated with Nephila (an investment fund specializing in meteorological risk). They successfully conducted an experiment based on smart contracts to accelerate and simplify the transactional part and the claims and compensation processes in the context of natural disasters between investors and insurers.

The blockchain buzz is on the rise in the insurance industry. Proof of the growing interest in this technology: the latest initiative - dubbed " B3i " - which involves five major European insurers and reinsurers. The Dutch Aegon, the Germans Allianz, and Munich Re, as well as the Swiss Swiss Re and Zurich, have joined forces to study "if the Blockchain can be used to develop standards and processes" for use in the whole sector and "to catalyze efficiency gains ".

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