The insurance industry’s exploration of blockchain-based solutions continues to expand, potentially impacting future policies available to commercial policyholders. The Blockchain Insurance Industry Initiative (B3i), an industry consortium tasked with exploring the potential uses of distributed ledger technology, also known as blockchain, expanded to 15 members last week. B3i was founded in October 2016 by five insurance companies – Allianz, Aegon, Munich Re, Swiss Re, and Zurich – to allow members to exchange and test ideas for potential uses for this technology in the insurance industry. Current member companies are Achmea, Aegon, Ageas, Allianz, Generali, Hannover Re, Liberty Mutual, Munich Re, RGA, SCOR, Sompo Japan Nipponkoa Insurance, Swiss Re, Tokio Marine Holdings, XL Catlin and Zurich Insurance Group.
The B3i initiative is a platform “for the efficient and trendsetting testing and improvement of inter-company processes” to “optimize business processes and value chains,” according to members of the group. While the consortium’s findings will not be reported to the public until at least June 2017, analysts predict that insurance applications for blockchain-based technologies will substantially impact policy underwriting and sales as well as claims management and settlement. A recent report from PwC explains that insurers can use blockchain-based recordkeeping to improve placement and pricing of insurance by making more robust information easily available during underwriting. The PwC report also explains that insurers can simplify claim management (particularly in undisputed claims) by making record sharing between insurance companies and claims administrators more efficient. Similarly, another report by McKinsey and Company explains that insurance companies can improve efficiency and profitability by increasing fraud-detection capabilities and reducing administrative costs.
Well-informed businesses can gain a potential competitive advantage by understanding the applications of blockchain technology in the insurance industry.