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Blockchain has the potential to ease regulatory burdens and costs on companies by allowing regulators and other stakeholders access to specific data and information.
“Blockchain allows for multiple parties to have role-based or needs-based transparency and access to that portion of the contract that is relevant to them,” said Sandip Patel, Boston-based global managing director of insurance industry for IBM Global Business Services.
He said this was one of the goals in the American International Group Inc./Standard Chartered Bank P.L.C. initiative: to provide such access to auditors and regulators.
“Our multinational business was well-suited for blockchain technology because a typical multinational policy can take a lot of time due to local regulatory requirements — every country has different regulations for different products, and these regulations are constantly changing,” said Carol Barton, New Yorkbased president of AIG multinational and business insurance in New York, in an email.
The greater ease in data transparency and access could translate to time and cost savings, experts say.
“Whatever enters the blockchain is there forever, so you can go back in to a tamper-proof environment to see what happened and when it happened,” said Anudeep Chauhan, Chicago-based managing director of insurance strategy for Accenture P.L.C. in North America. “This has the knock-on effect of providing a very good track-and-trace audit trail, and so has huge regulatory implications because the regulators can then go back and see what happened without concerns of tampering.”
“There are massive cost reduction implications because the infrastructure technology and operational cost would likely come down,” Mr. Chauhan said.
“We know how much money companies spend simply to improve regulatory control and to be able to provide required statutory reporting to regulators and auditors. All of that potentially can be streamlined and improved to a great degree,” he said.
Insurance industry players have recently produced prototypes and proofs of concept using blockchain technology, which appears to offer many cost- and time-saving benefits but is still a nascent concept whose potential remains to be proven.