For a wider overview of blockchain technology see Rick on InsurTech here
Factom is a Shanghai/Texas based startup that provides 3rd party compliance and audit services on the blockchain through a trustless ledger that stores different data formats safely with no fear of alteration or loss. Although Factom is not a Chinese company, its significant presence in China in addition to its recent entrance into insurance represents a good example of a blockchain startup that has identified an increasing number of use cases within the Chinese insurance industry.
It’s important to note that although Factom is based on a blockchain architecture, Factom’s software is a separate layer that protects decentralized information by emphasising user anonymity. For insurers, this means the ability to validate policy issuance, policy holder identity and claims in a more secure manner.
When considering Factom and other blockchain-based offerings, it’s also important to remember that the use of blockchain does not mitigate the risk associated with the majority of first-party and third-party frauds. Fraud detection and loss adjusters will still be required and blockchain does not represent a radical substitute for current fraud detection and claims processing facilities.
Nevertheless, Factom has recently begun applying its flagship product, Harmony, to the insurance industry by enabling insurers to prove provenance of policies by recording digital signatures and allowing insurers to offer usage based policies to validate the time of policy issuance and expiration.
Factom’s team is staffed with both blockchain pioneers and open source software contributors including:
CEO: Paul Snow
Paul is chief architect, co-founder and CEO of Factom. He has a Masters in computer science from Texas A&U University. Paul previously served as chief technical lead at CGI-AMS. Paul also acts as Chief Software Architect for DTRules, an open source project that provides rule based decision trees for software developers.
Chief Data Scientist: Brian Deery
Brian Deery is leading Factom’s data analytics team. Previously, he served as an R&D Engineer at Pentair Ltd and is the founder of DTRules.
VP: Zeen Zhang
Zeen Zhang is VP and general manager of Factom’s China unit having previously served as a FinTech investment director, with Fosun and KPMG audit roles and holds an MBA from the University of Texas.
In addition to this deep domain expertise, Factom has managed to lure some top tier VCs including Tim Draper who has encapsulated Factom’s approach: “Centralized data is prone to critical failure by any individual mistake, whether by user error or malicious hacking. By decentralizing data through the blockchain, Factom avoids critical failures due to user error or hackers.”
Ultimately, although Factom is targeting numerous industries, its early steps into insurance highlights the potential for blockchain-based solutions to automate claims handling, validate policy issuance, and lower the loss ratio for property insurance in particular. Whether Factom can capitalise on its early successes within document management to succeed within insurance will test Factom during 2018.
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