2018 will be year of blockchain for insurers

Blockchain has the potential to completely change the way the industry looks at the supply chain, David Piesse, chief risk officer at Guardtime, told SIRC Today.

He cited lessons learned when deploying blockchain in the defence industry over the last five years.

Piesse, who is based in Hong Kong, also said the technology is going to transform the role of intermediaries who will become more like risk advisers, as opposed to being transaction-orientated, compared with their role today.

Commenting on the marine insurance industry in particular, Piesse said: “Right now there is a lot of paper, and this paper trail is causing expenses to rise. This is a threat to the industry administration.

“Shipping is a global trade and premiums are also dwindling in a competitive environment.”

He suggested the use of blockchain could streamline many of the processes into an immutable audit trail, and digitise the current model for operational efficiency.

EY, shipping giant Maersk, Microsoft, Guardtime and various other insurers announced on September 6, 2017, that they had completed a 20-week blockchain proof of concept trial for marine insurance.

The completed proof of concept used KSI, a blockchain developed by Guardtime, to streamline a number of elements of the process. For example, it created an end-to-end auditable supply chain now due to be deployed in 2018.

“We believe more and more companies will join this platform,” said Piesse. “2018 will be the year of blockchain for insurance.”

The prime directive behind blockchain technology, according to Piesse, is the protection of data, which is especially important when cyber crime is on the rise.

He called for the industry to pay more attention to its data integrity in conjunction with privacy while potentially turning this into a profit centre for adopting companies.

“Failure to understand and deploy data integrity can lead to inadequate cyber cover, reputation risk on the balance sheet, regulatory fines and rating downgrades,” he said.

“By putting in proper blockchain warranty on data integrity and provenance you can transform a perceived cost centre into a profit centre, and align the insurance industry with realistic cyber trends caused by digitisation and exponential technology,” he concluded.

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