“Everyone knows” that blockchain technology is supposed to be the next hot insurtech thing, and that it involves people in goatees who trade Bitcoin, from laptops in coffee shops, while muttering mysterious phrases about “coin offerings.”
Computer Solutions & Software International LLC — a Coconut Creek, Florida-based insurance software firm that does business as VUE Software — has tried to make sense of the blockchain tech news, by commissioning business grad students from Harvard and New York University to write a report about the topic in plain English.
(Related: LIMRA Aims to Surf the Tech Wave)
The grad students looked at insurers and venture capitalists to see whether anyone in insurance is actually using blockchain tech, and, if so, how.
The report authors note that block tech is a strategy for spreading an encrypted ledger, or collection of transaction records, around on the web.
Here are three things the report authors found, drawn from the new report.
1. Blockchain terms can be expressed in English.
The authors have demonstrated this fact by including a glossary that defines terms such as “immutable ledger” and “smart contract.”
The authors state, for example, that an “immutable ledger” is, “A history of transactions that cannot be altered in any way, a key characteristic of blockchain ledgers.”
2. Most insurers and insurtech venture capital firms have little or no involvement in blockchain tech efforts.
Few insurers seem to have their blockchain tech efforts, and only 16% of insurance venture capital firms appear to have significant investments in blockchain efforts, the authors write.
However, many large insurers are dabbling with blockchain tech investments, by supporting the B3i and RiskBlock Alliance blockchain insurtech consortiums, the authors write.
B3i has focused on blockchain efforts for property & casualty insurance, but RiskBlock recently teamed up with LIMRA to introduce an app that life insurers can use to monitor the Social Security Administration’s Death Master File.
3. Blockchain could help life and health insurers with activities that already involve use of old-fashioned paper or digital ledgers.
The VUE report authors note that health insurers, health care providers and patients often have to collect and share medical records, and that life and annuity issuers need to track information about whether people are alive or dead.
Blockchain technology could create good, useful systems that people can use to share health and mortality records, the report authors write.
Because blockchain ledgers are encrypted, the ledgers already meet federal Health Insurance Portability and Accountability Act (HIPAA) health information data security requirements, the authors write.
The parties involved in using blockchain systems can have different levels of approvals, or “permissions,” for reading and adding to the data.
A blockchain-based death reporting system, for example, could give hospitals and hospice services permission to enter information about deaths. Life insurers could get the names of life insurance policyholders and annuity contract holders who have died.
A life insurer that wanted to pay death benefits for funeral services promptly could use blockchain technology to offer a beneficiary a list of nearby funeral homes, and to arrange to send benefits to the funeral home, according to the VUE report authors.
Similarly, for parties who create and use medical records, having varying levels of access to an encrypted, distributed medical record database could make sharing records quicker and easier, the report authors write.
“Countless parties require access to medical records, while still others are required to add to the records themselves — primary care doctors, specialists, insurance companies, pharmacists, surgeons — dozens of professionals over the course of a lifetime,” the report authors write. “With a distributed ledger, an individual could very easily grant and revoke both read and write access to their medical records.”
A copy of the VUE Software blockchain tech report is available here.
— Read Cognizant to Use Blockchain Tech to Rewire Life Industry in India, on ThinkAdvisor.