Hailed as one of the few insurtech technologies with the potential to transform the centuries-old re/insurance industry, blockchain is finally moving from ‘hype’ to reality as companies are becoming increasingly focused on investment returns and solutions with real-world usage to retain their competitive position in the market, says Christopher McDaniel, president of the Institutes RiskStream Collaborative.
As a senior leader at the industry-led consortium, McDaniel believes that the re/insurance industry is changing at a faster pace than ever before, rapidly developing and testing new technologies – although adoption is still slowed by bureaucratic barriers.
“The days of proof of concepts are over, today is about production solutions and verifiable efficiency gains,” he tells Intelligent Insurer. “The last couple of years it was all about the hype. This year it’s about real-world solutions and return on investments.”
McDaniel, however, adds that even though innovation is occurring at a galloping pace, with cedents, brokers and carriers constantly engaged in designing, building and testing new solutions, the production and adoption part still remains a significant challenge for many. “You hit the old school wall when you get to final production testing and sign-off. We have spent several multiples of time trying to push for production and adoption this year, than we have on the actual build of our solutions.”
He points out that the main challenge to innovation is not technology. “Overcoming 100 plus years of bureaucracy and ensuring that all stakeholders are involved in the path to adoption is the real challenge that insurers face. The technology is easy compared to the people side of things.”
RiskStream Collaborative is an organisation testing blockchain-based applications, including a proof of insurance, and a first notice of loss data-sharing process. It launched the not-for-profit consortium of insurers, reinsurers and brokers in 2017, and currently has around 50 global member with plans of further expansion in Canada, UK/EMEA and Asia Pacific.
The organisation has recently partnered with Aon and Guy Carpenter for its Canopy framework, which aims to bring greater efficiency to the reinsurance placement process through distributed ledger technology (DLT).
“We believe that the days of stand-alone solutions are drawing to a close,” McDaniel said. “That’s why we built Canopy, the first ever standardised and reusable blockchain framework. It allows us to build multiple applications on top of one foundation, rather than recreating the wheel multiple times for every new use case. Canopy also acts as a bridge to a firm’s back-office systems. We hope that it will be the cross-sector and cross-geography data layer that will connect all players in the risk and insurance industry.”
“If frameworks such as Canopy are adopted across the industry, it will open up the opportunities for sharing information across sectors and geographies. We will also being adding predictive analytics/AI capabilities next year, as well as positioning it as the connector between ‘internet of things’ devices and the industry back offices.”
McDaniel sees big opportunities in the areas of personal passenger auto, commercial auto, certificates of insurance, life and annuity and reinsurance.
“A big challenge is ensuring you have something for everyone, hence we are building personal lines, commercial lines, L&A and reinsurance solutions. Later this year we are also going to venture into workers comp and surety bonds,” he said.
Institutes RiskStream Collaborative, Blockchain, Insurtech, Insurance, Reinsurance, Christopher McDaniel, UK, EMEA, Asia Pacific