PwC: blockchain may revolutionise insurance
A move towards a new way of collating information could revolutionise the wholesale insurance industry, professional-services firm PwC said yesterday.
Blockchain — a computer file underlying a mutual distributed ledger where blocks of information added in sequence cannot be changed or deleted — could reduce costs, improve efficiency and increase business.
Arthur Wightman, PwC Bermuda leader and insurance leader, said that the firm’s blockchain team, launched at the start of the year, had joined forces up with market intelligence company Z/Yen to produce a global industry report, the first of its kind, on how blockchain could impact insurance.
Mr Wightman said: “The report concludes that not only does blockchain offer the promise of cost reduction and efficiency, but it could also enable revenue growth as insurers attract new business through high-quality service.
“Research by PwC finds that 56 per cent of firms recognise the importance of blockchain, but 57 per cent concede they do not yet know how to respond.
“We want to help firms make this leap. Financial technology solutions are becoming a catalyst for change and innovation in the insurance and broader financial services industry.”
But the report said that insurers, reinsurers, underwriters, brokers and other players will have to collaborate with others, including technology experts, to maximise the benefits.
It also found that relationships with interested groups, including customers and stakeholders, will improve as errors are reduced and accuracy improved.
And the report added that it “may even be possible to reduce capital requirements as insurers on opposite sides of a transaction proceed to agreement more quickly”.
Mr Wightman said: “Further, as reinsurance is an important sector in the global economy as it transfers risk from organisations to insurers and therefore underpins large-scale business and trade globally, financial technology can also help the industry to discharge its responsibilities for the common good.”
He added: “Firms need to be realistic — any proposed changes have to be viewed in the context of how they will impact the market as a whole — the industry is data heavy and the actions of brokers, insurers and reinsurers are all interlinked.”
The joint report outlines 12 potential uses cases and three areas where blockchain technology could have the biggest impact on insurance and reinsurance.
The three are the placement process, facilitating the placement and management of the insurance contract and all the documentation and managing all changes and transactions throughout the contract.
Blockchain could also be valuable in claims management to order claims documents and allow all parties involved to view and monitor information and in compliance tasks, where it could reduce the burden on customers and businesses around proof of identity, anti-money laundering and sanctions processes.
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