Blockchain technology seems to be permeating into almost every sector of the market and now, its taking over the insurance industry as well. Now, many insurers are adopted R3’s distributed ledger technology (DTL).
A few of the main insurance companies adopting the technology include Chubb, Marsh, and Liberty Mutual. The switch by these insurance companies followed the adoption by the European reinsurance consortium’s switch from Hyberledger Fabric to Corda.
The blockchain has been tested for two years to ensure its viability. According to Patrick Schmidt, the vice president of RiskBlock,
“We went through an intense and laborious process and finally narrowed it down to two, which were Corda and Digital Asset” and “It was a close race – and we haven’t worked out all the details yet – but we have decided on Corda and we are moving in that direction.”
Schmidt also mentioned that one of the most important issues for the companies looking to adopt the technology was privacy. Without mechanisms in place to protect privacy, many companies denied adopting.
In Schdmit’s words,
“What we learned from testing ethereum was that our members found huge value in the in the smart contracts, and found huge value in blockchain-enabled technology. But they were a little big concerned about data segregation . . . Even with a private variant of ethereum, their concern really was around data being stored, even if encrypted and hashed, on every node in the system.”
The technology also has several features that will benefit insurance companies, such as:
Proof Of Insurance
First, the system has a proof of insurance mechanism. This allows for the weeding out of uninsured motorists and more efficient data sharing. Further, with fewer uninsured motorists, the risks decrease.
Second, claim filing becomes easier as well. The data sharing mechanisms will be able to inform the insurer that the policy holder intends to file a claim. This provides more insight for insurance companies so that they can manage the claims better as well.
Transparency And Better Data Collection
Third, the system may allow for greater transparency and data collection as well. According to Ryan Rugg, the global head of insurance at R3,
“Over the last few months we have seen several insurers migrate to Corda due to its enhanced privacy and scalability, information is shared on a bi-lateral or multi-lateral basis, meaning parties that are not involved in the transaction will not see it.”
“Corda gives insurers the ability to integrate and secure disparate data sources, whilst simultaneously ensuring transparency across an interconnected network of clients, brokers, insurers, and other third parties.”
With these mechanisms in place and the interoperability of the system, insurance companies may be able to provide clients with better service, while also ensuring that they can run strong businesses.