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MIAMI — The information sharing and collaboration that blockchain technology fosters should lead to improved risk assessment processes, insurance and technology experts say.
And as the technology spreads through the insurance placement chain, captive insurer owners will be able to use the blockchain to expand their coverage of third-party risks, they say.
Blockchain, which is a distributed ledger technology, allows multiple users to securely share contract information and bind parties to agreed wordings that are automatically documented and validated, said Rocco F. Mancini, consultant, captive solutions at Marsh USA Inc. in Norwalk, Connecticut.
He was speaking on Thursday during a session at the World Captive Forum in Miami, which is sponsored by Business Insurance.
Blockchain technology helps reduce frictional costs in insurance transactions, but one of the main benefits is the collaboration it encourages, said Doug Alexander, digital enterprise architect at Axa XL, a unit of Axa SA, in Avon, Connecticut.
“The value of blockchain technology is not the tech, it’s the opportunity it creates for collaboration with all of your peers,” he said.
For example, Axa XL and others want to provide more value to policyholders by enhancing their risk assessment processes, Mr. Alexander said.
“We have a unique view across all of our networks of what is good behavior and what is bad behavior, and we feel that we can share that with our insureds with the right legal framework, which drives better business decisions, i.e. lowers everyone’s costs,” he said.
Blockchain will enhance collaboration between all the parties in insurance transactions, including brokers, said Susan Joseph, New York-based North America representative for B3i Services AG, an insurance industry blockchain initiative.
“I get a lot of questions about whether (blockchain) will kick the broker out, and the answer is ‘absolutely not’; we need the business relationship, so they are a very central part of this,” she said. “Blockchain allows everybody to do what they do best, and that is to serve the customer.”
Once the technology is used more widely, it will allow captive owners to make better use of their captives, said Mr. Mancini of Marsh.
For example, the gig economy is presenting captive owners with the opportunity to write more third-party business, he said.
“I think we’ll see more folks working with (insurers) to front the risk and then using blockchain to create efficiencies,” Mr. Mancini said.
Walid Al Saqqaf, founder of InsureBlocks, U.K.-based educational resource for blockchain in the insurance industry, said that blockchain technology will become the foundation for a new way of doing insurance business, Forbes reported. The decentralized nature of blockchain technology allows participants to share data securely and on a confidential basis, which enables customer-centric insurance products and streamlined services that are more efficient and provide greater value to clients.