Blockchain is poised to rewrite the rules of competition in the insurance industry by streamlining operations, enabling data to be shared seamlessly with external stakeholders, and disrupting traditional business models and intermediaries. Here, we’ve gathered key findings from the report Blockchain in Insurance: Risk Not, Reap Not, a report based on a global survey with 526 insurance professionals.
Blockchain’s business impact is potentially game-changing.There was broad consensus that blockchain would have an important impact on the insurance industry, with 86% saying it would be either important or very important, including 54% who said it would fundamentally transform the industry. The expected benefits of blockchain that were cited most often were faster claims settlement (43%), reduced fraud (40%), improved record keeping (40%), streamlined processes (38%) and greater transparency (38%).
Use case assessment is top of mind.Respondents said their organizations are exploring a variety of blockchain use cases, including payment processing (73%), insurance processing and multi-party collaboration (59%), death benefit processing (53%) and new business models, products, markets and services (50%).
Blockchain strategy remains a work in progress.Insurers need to identify where blockchain can generate business value and decide which types of blockchain platforms to join. Although early in the game, only 44% of respondents said their organization had identified the functional areas and business processes that could be impacted by blockchain. However, an additional 54% said they were in the processing of doing so. There is a wide variety of blockchain platforms, with different platforms best suited to different use cases.
Communication and identifying proofs of concept are top impediments.The internal barriers to blockchain adoption are largely strategic rather than technical. The top issue cited by respondents as a barrier to adoption was communicating to their key decision makers the benefits of adopting blockchain technology (51%). The communication problem largely stems from the struggle to understand how to apply blockchain. Two of the barriers to adoption cited most often by respondents were understanding blockchain and use cases (48%) and evaluating the cost-benefits of use cases (49%).
Blockchain expertise is an unspoken but critical ingredient in business success.Insurers will need additional blockchain expertise, but many organizations appear to be underestimating the challenge. Roughly half of respondents felt their organization would require additional expertise in compliance (54%), cybersecurity (54%), risk management (52%) and legal (49%), while only 45% said they believed they would need additional technical expertise.
External roadblocks are manifold but manageable.Privacy and security (71%) was the issue cited most often by respondents as a top external obstacle to adoption. Regarding privacy, permissioned blockchain networks are working actively to design methods to allow enterprise users to limit access to their data. As for security, blockchain networks, in fact, provide a much higher level of security than is currently available, and we believe that security concerns will lessen as decision makers become more comfortable with the technology and regulators catch up with its emerging implications. Scalability/latency (65%) was named next most often as an external barrier.
A willingness to collaborate is vital but hasn’t crystalized.The greatest benefits from blockchain adoption will stem from its ability to streamline data exchange among the multiple parties involved in insurance transactions. Yet, 55% of respondents said that working with partners/ecosystem members is one of the top barriers to adoption. The aspects of collaboration that respondents most often cited as posing high difficulty were establishing connectivity with partner systems (52%) and identifying and finalizing blockchain use cases (47%).