This episode of Critical Point is the third in a series on blockchain featuring Milliman’s Shea Parkes and Anders Larson. In this episode, they discuss potential insurance applications for blockchain technology, along with some of the drawbacks. To listen to the entire podcast, click here.
Blockchain is an emerging technology that people in every industry are becoming more familiar with, and yet, the perception still exists that blockchain is more theory than reality. Blockchain is the technology upon which a validated and shared record of transactions and/or events is based and which, together with widely accepted technologies for data capture and analysis, offers itself as a decisive platform for generating value in the insurance sector.
In this report, Milliman consultants José Silveiro and Ruben Nova explain blockchain technology, together with some of its current uses. They also present an example of an insurance product that could benefit from this technology, with the aim of providing some context for the aspects to consider when launching a prototype.
In this episode of Critical Point, the second in a series on blockchain, Anders Larson and Shea Parkes dive into the technical side of blockchain. They discuss hashing and how it relates to bitcoin and other cryptocurrencies, and also discuss public key cryptography. In addition, Shea and Anders touch on the strengths and weaknesses of blockchain and potential applications.
To listen to the entire podcast, click here.
In the latest episode of Critical Point, Milliman consultants Shea Parkes and Anders Larson provide an introductory look at blockchain. They discuss what the technology actually is and how it relates to cryptocurrency.
This podcast is the first in a series on blockchain. Other blockchain topics will include potential use cases in insurance.
To listen to Shea and Anders talk blockchain, please click here.
Insurance customers expect personalized, agile, and on-demand delivery from carriers nowadays. Insurers must keep up with technological advances and implement them to provide solutions that address these expectations. In her Best’s Review article “Mind your ABCs,” Milliman’s Pat Renzi explores why insurance companies must center their strategic initiatives on using emerging technology like artificial intelligence (AI), blockchain, and the cloud. She also explains how partnerships that feature diverse experts will see faster, smarter, and more successful disruption.
Blockchain technology may offer insurance companies the security that they have only dreamed about. The technology’s security components enable users to quickly identify whether a stream of data can be “trusted” for accuracy or not. In their article “Blockchain: An insurance focus,” Milliman’s Michael Henk and Robert Bell explain the basics of the technology. They also explore the benefits and limitations that blockchain could have on insurers.
Here’s an excerpt:
Blockchain technology also has the potential to limit fraudulent claims. False billings and tampered documents are less likely to “fall through the cracks” if the data is decentralized and immutable, which will reduce the amount of erroneous claims payments. Utilizing this technology will enable insurers to lower their loss adjustment expenses and pass on that savings to consumers in the form of lower rates. Furthermore, if this technology becomes widely used, it can help mitigate identity theft and other cyber liability losses.
Identity theft is the fraudulent acquisition and use of a person’s private identifying information. Usually this is done in order for the perpetrator to realize a financial gain. Because the data is encrypted at the financial transaction level, the technology minimizes the amount of identifying information available in the blockchain, thus minimizing the risk of identity theft.
The encryption protocol utilized by the blockchain technology has the capability to limit cyber liability as well. Cyber liability is the risk that personally identifiable information will be compromised by a third party storing an individual’s data. Current practice is to store this data in a central location with software to protect against hacking. With this technology, it enables data to be run and stored based on the current blockchain without unencrypting the underlying data because the chain itself can be independently verified through separate nodes….
…As with any emerging technology, these potential benefits do not come about without a few potential limitations, in addition to the security concerns discussed above. The most problematic of the limitations is scalability. In order for the insurance industry to utilize blockchain technology, it would take a remarkable amount of infrastructure.9 Currently, blockchain technology is limited by the amount of computing power available. In order for data to be decentralized, each node must be able to process the requisite data for each transaction for a growing number of participants. While smaller blockchains are currently successful with a limited number of participants, the insurance industry has a much larger population of participants that will need to have their data validated in a timely manner. This will mean not only more storage space, but also enough computing power to quickly be able to validate each new transaction or data point.