Opportunity for insurers
For the insurance market there are four cornerstones of opportunity:
Examining other issues
With any new technology or innovation, there are also ongoing concerns over scalability, implementation skills, practical integrations with established businesses and governance.
Known areas of concern among regulators are:
- Critical infrastructure systems have not reached a point of maturity, with significant legacy technologies still intact after years of M&As.
- The maturity of expertise, systems and shared services to protect corporations and their clients from data theft and compromise to networks or systems (including planting Trojans, is a high-risk.
- Standardized processes, methods, techniques supporting pre- and post-loss control mechanisms are gradually being implemented.
Key considerations for insurers:
- Scalability of the technology and operational integration to existing businesses
- Understanding the disruptive benefits or effects of blockchain or other technologies
- Timing, planning and risk management
Key considerations for the market:
- Reduction in centralized infrastructure will make monitoring more costly and complex in the short term for insurers and financial markets.
- Mandatory, prescriptive regulation is unlikely to be effective because the evolving threat means that it quickly will become obsolete, diverting resources from prescriptive risk management practices.
- Flexibility in the form of prudential regulation is needed to provide a sustainable platform for the future.
- The European Commission plans to overhaul the regulation of data protection and privacy across all member states by creating a single standard for all organizations processing personal data in the EU.
- Changes in how customers control their data, for example, new rules on consent or withdrawal of consent, will completely change the cost and ability of (re)insurers to share and update records and reuse information.
Analyzing data in real time, protected by the blockchain and as part of a strategic, holistic risk management strategy, is now a mandatory requirement for the insurance industry.
We have seen how data that affects the lives of customers and the solvency and reputation of corporations can be made immutable and independently auditable by leveraging the blockchain standard.
Tying big data repositories to the blockchain can enable those repositories to be used for long-term regulatory compliant archiving. This will make them available to customers, while still providing proof of segregation and PII handling for regulators and auditors.
The vision promised by big data and cloud computing is expected to dramatically transform the insurance industry. Analyzing this data in real time, protected by the blockchain and as part of a strategic, holistic risk management strategy, is now a mandatory requirement for the industry. It is a positive competitive differentiator and will enable insurers to serve the public in utmost good faith.
It is only by harnessing the value of big data technologies that the (re)insurance industry can properly evaluate the financial risk posed by floods, windstorms, hurricanes, earthquakes, volcanoes, cyber and terrorist attacks, and fraud. The big data approach allows everyone (catastrophe modelers, risk managers, loss adjusters and underwriters) to access and share insights with the peace of mind that the blockchain provides. This guarantees the veracity of the underlying data and makes it independently verifiable by auditors and regulators.
Summary
Progress in the insurance digital space will be driven by successful innovation, including the adoption of fast-emerging disruptive technologies such as blockchain.
