Blockchain technology has the potential to address issues of trust and reconciliation in insurance
Marsh, our MMC sister company and a global leader in insurance broking and risk management, was fully engaged in Day 1 at ITC 2018 last week with participation on two key panels in the first afternoon of content discussions.
The first of these panels, “Blockchain: Building Trust in Insurance by IBM” featured Sastry Durvasula, Chief Digital Officer and Chief Data & Analytics Officer at Marsh in a discussion of the promise of distributed ledger technology, and in which Marsh figured heavily in illustrative case studies. The session kicked off with an interesting factoid to illustrate how the role of trust in insurance has changed over time. When the 1906 San Francisco earthquake destroyed all existing insurer records in the city, insurers simply asked clients how much they needed to cover the damages. Today that level of trust is simply unthinkable.
Insurers worry about fraud and companies often hoard their data. Records are often stuck in separate systems and can’t be easily shared. That means there is a lot unnecessary reconciliation in the back office and no one source of truth between vendors.
Blockchain technology has the potential to change all of this. “We wanted to find an area that could make a meaningful impact in our core operations and then expand it into other business lines,” said Durvasula.
To be sure blockchain technology is still in its early infancy, especially in the insurance industry, but the session’s panelists gave some examples of how it is being applied today. For instance, Marsh, IBM and Sales Force worked together to create a blockchain network that will allow customers, like a construction company, to easily show proof of insurance. While providing such proof is theoretically a simple process, in reality it can take days or even weeks and involve multiple phone calls, fax machines, and in some cases even a drive to the insurance agent.
In a live demonstration Durvasula showed how a fictional construction company could go to a webpage and in a few clicks receive a certification of insurance and then share it with their customer via text or email. This solution also circumvents problems like over sharing, where in the past many companies ended up handing over their entire policy rather than just proof of insurance because it was difficult to get their hands on the certificate.
The companies now plan to expand the blockchain network to allow companies to verify key credentials of gig economy workers.