Since 2016 we have seen a plethora of Proof of Concepts (PoC) in the insurance space. Some of these PoCs have moved up to the stage of becoming a Pilot. For this week’s episode I had the great pleasure of chatting to David Edwards, CEO at ChainThat and Ranvir Saggu, CEO at Blocksure to discuss building a blockchain PoC and/or pilot in the insurance industry. Both of their respective companies provide enterprise solutions using blockchain, DLT and smart contract to insurance companies.
2 Minute Definition of Blockchain
David – Blockchain in insurance is a group of technologies that enables us to transact between parties without having a centralised service provider. Promise of a shared process and what you see, I see.
For Ranvir, it’s a scalable technology that allows insurance partners to build network ecosystems. That can remove up to 30 – 50%of back-office costs, speed up processes and drastically improve the customer experience.
Why hasn’t blockchain happened yet?
The insurance industry is slow to adopt new technologies. 2017 was the year of demonstrations and proof of concepts whilst 2018 is the year of large consortiums coming out including the big 4 being involved in blockchain insurance.
Ranvir reminded us that it took at least 10 years for people to start realising the potential of the internet from the moment it started – “We have to remember that we are dealing with a nascent technology which we are trying to apply in a very regulated industry”.
There are numerous hurdles that insurance companies have to overcome to be able to appreciate blockchain technology. Risk departments, compliance departments, claims and finance departments all have to learn how this technology can benefit them. This isn’t going to happen overnight but slowly and surely.
For David insurance companies have to work with their counterparties, potentially their competitors. It requires ecosystem to get these solutions off the ground, and that’s a challenge particularly relevant to the insurance industry. We have seen it with the challenges the London Market had in taking it of the ground. All counter-parties need to invest and be as enthusiastic about the project as each other.
Two years ago it made a lot of sense to go down the PoC phase as we weren’t quite sure what could be done with the technology and not many people had experimented with it. But now there has been so many completed PoCs, so many papers and studies that there isn’t any more real need to prove the technology.
David – “So if you’re going to do something with Blockchain you should build a pilot, put some success criterias, with a mentality to get some value out of it instead of just getting a press release out.”
For Ranvir it’s also about how you do the pilot. Understanding what is it we’re trying to do? It is recognising that there is a lot people with a vested interest, managing their P&L and their cost base. Lets try to do it in a low risk way. What is the lowest risk way for getting to a pilot. You got to have a commitment to take this out to market and when that happens and we see the technology working we will then see a snowball effect.
How do I convince my peers to adopt blockchain?
David – First we need to forget the terms DLT and blockchain and instead focus on the business value, the results it will bring to the business and what the savings will be.
Ravir – There are two ways of doing it. First thing the person has to realise what are the strategic aims of that business and the second is what can they do with blockchain? It is recognising that blockchain allows you to start thinking about new products and how you build them. You can start imaging how you build your policies and change the way you deliver your products to customers. Fundamentally you have to excite those executives and deliver the full benefits this technology can deliver. This technology is transformational and it will deliver the 30 – 50% cost reduction in processing. Whilst on the front end it allows you to do some very exciting stuff on how you build products.
Good and Bad Examples of blockchain implementation
David – A bad project is one that didn’t go further than the PoC stage. A PoC was successfully completed, everyone was very excited by it but nothing was planned to what would happen afterwards. No next steps were determined, the project lost momentum and eventually stopped. ChainThat have walked away at numerous occasions from potential projects were they deemed that blockchain wouldn’t add sufficient value in comparison to other more traditional centralised models.
Ranvir – Similarly Blocksure would be approached by companies wanting to do a blockchain project only to realise that a web front end and a database would do a better job than blockchain. Their desire to use blockchain was just for the case of using blockchain instead of understanding the business case and identifying the best technology to meet the requirements of the business case. The key is realising that blockchain isn’t the answer to all problems. The technology has been proven by numerous PoCs and by B3i. It is now a human and a cost of change issue more than anything else.
Ranvir & David share many other interesting points in this podcast including the exciting opportunity of linking the blockchain work the finance industry is doing with the insurance one. If you liked the podcast please do review it on iTunes. If you have any comments, suggestions on how we could make it better please don’t hesitate to add a comment below. If you’d like to ask a question to either David or Ranvir feel free to add a comment below and will get him over to our site to answer your questions.
ChainThat is an insurance blockchain solutions provider. They work with business leaders across the insurance industry who have a problem extracting business from technology. ChainThat, creates real world applications that deliver on the promise of innovation so that the global insurance market is empowered to move forward, which means they can finally start releasing the value trapped in the chain.
Blocksure is a new technology services company delivering blockchain powered solutions to the insurance industry. Their aim is to reduce operational expenditure across the industry and enable new products and distribution models. Blocksure has developed a proof of concept insurance operating system built on blockchain technology. It is a full cycle insurance sales, administration and claims platform.