Blockchain accelerates insurance transformation – KPMG Report
Article Synopsis :
Four years ago nobody had heard of blockchain. Now major insurance carriers are investing, consortiums are forming, and venture capital is pouring in.
Why? The KPMG report “Blockchain accelerates insurance transformation”, answers with some of the key promises of blockchain technology and a discussion on how smart insurers can leverage blockchain to build smart solutions. The report identifies popular blockchain use cases and maps out next steps for the successful implementation of blockchain based applications. Per the report, blockchain can help insurers drive value through:
- More efficient processes
- Improved pricing and risk management
- Enhanced trust via better claims experience
- Greater financial inclusion
- Demand for new insurance products and services
- Use of new ‘smart’ contract models
Blockchain holds the potential to deliver huge benefits in terms of efficiency and cost savings through the entire insurance value chain. Specific applications include:
- Personal accident insurance – create a transparent and seamless claims journey dramatically improving customer satisfaction
- Record keeping – leverage blockchain to create, organise and maintain company records in a single, reliable, secure, and accessible repository
- Digital identities – use blockchain data and digital ledgers to digitise and validate customer information and improve compliance
- Claims management – automate the verification of coverage and streamline claims settlements to improve operational efficiency and remove costs
- Peer-to-peer – build a peer-to-peer network to establish smart contracts without the need for intermediation or administration
Blockchain applications, asserts the report, incorporating other enablers, such as big data, digital labour and analytics, will also be key to maximising the value of blockchain investments. Key actions executives can take now to capitalize on blockchain include:
- Educate yourself, your executive team and your decision makers about the disruptive potential and the threat posed by blockchain.
- Develop a strategy and roadmap for implementing blockchain within the enterprise and with other third parties.
- Nurture, foster, incubate, partner, invest or acquire blockchain and digital ledger skills and capabilities.
- Get involved in industry blockchain and digital ledger partnerships, consortia, standard setting bodies and other collaborations as early as possible.
- Identify and qualify use cases with total focus ROI and robust, real, tangible business applications.
A very useful illustration on the potential impact of blockchain on key insurance activities is included, as is a case study on blockchain in mobile insurance.
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Digital Insurer's CommentsWhen will blockchain advance out of the trial and experimentation phase? The success of Smart Contract, Teambrella, and Traity (chatbot Kevin) suggest sooner rather than later. But recent episodes such as the DAO hack, however, in which thieves made off with $50 million in cryptocurrency, remind us that industry-wide standards and issues of security must first be resolved. Blockchain is supposed to eliminate the need to trust humans. But humans, it turns out, are tough to take out of the equation.
Governments and regulatory bodies are interested in blockchain. The report asserts, and we agree, that broad-scale adoption is three to five years out. Digital insurers are investing in blockchain now, to build out knowledge and have a voice in the conversation. If you’re not at the table when the blockchain deals are cut, you risk getting cut out of the deal.
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