Once an insurer has understood that the blockchain will change the business as the internet did 25 years ago, the question they might ask is how to get on this journey.
The methodology proposed by Evolvers rely on three pillars :
- Understanding the technology
- Analysing existing use cases
- Define projects on a test & learn basis
Understanding the technology is more than getting the IT beyond the blockchain, it is seeing how the paradigm changes compared to current insurance business and IT.
For example, on key change realises on decentralisation. The way to do insurance today is to rely on a strong balance sheet with a high level of capital. Clients risks is therefore centralised on these balances sheets. Furthermore, the high-end part of the risk is centralised even more by reinsurers. Contrary to this, the blockchain is a technology based on decentralisation.
The second step of analysing use cases can be done with a wide view on insurance and also other sectors like finance where the new technology arrives faster. To underline the previous point, it enabled the creation of new currencies, crypto-currencies, totally decentralised whereas until recently, it was thought that a currency needed a central bank.
Some insurance projects using blockchain have already gone live either on-chain or off-chain:
- Insurance of on-chain irks such as crypt-asset theft
- Parametric insurance using on oracle such as flight delay
- Job loss insurance in Sweden
- Life insurance on bitcoin in Bermuda
- Tokenisation of CAT bond funds
- Automatic consolidation of international intercos for group accounting
There are also a few use cases being studied, such as the project carried out by Evolvers on insurance captives on blockchain.
This will further increase the knowledge of blockchain by the teams to move to the next innovative step.
At this stage, the goal is to foster innovative ideas based on pain points or processes that seem worn off. As we never know what will succeed, try a few POCs at a low cost and move on using test & learn. Some projects will be stopped and never make it to the MVP phase. However they will all increase substantially the knowledge.
To achieve this, you can rely on the best experts on the market, the ones who know insurance, innovation, and blockchain : Evolvers and our partners.