Insurance companies have long been virtuoso intermediators of actuarial risk. Many, however, are not as prepared to address cybersecurity risks or apply disruptive technologies to their traditional business models. Blockchain provides a way for insurers to streamline and strengthen their own internal processes and utilize insurance dynamics for new products and markets.

Times Are Changing

Once thought of as vital yet mundane repositories of actuarial science, the insurance industries now deploy numerous advanced technologies to protect the interests of customers. An insurance company — like any sustainable enterprise — must closely and increasingly align with the value proposition of its clients, both present and prospective.

In the past, an insurance transaction typically involved financial protection against hypothetical events that hopefully did not occur, or payment to customers when these events did occur. Times have changed, however, and insurance companies are now anticipating and addressing unwanted incidents for their customers in the best possible way: by forestalling these incidents via sound data principles.

These new approaches may be necessary for both the company and its customers. For example, an organization should take all appropriate steps to help assure that its own cyber and data resources are secure and sustainable. But the same insurance company can offer cyber insurance policies as a service or product to its customers. Before such policies are written, the insurance company may require that customers undergo their own cyber risk review — similar in intent, although with a different focus and scope — with penetration testing and other components to help ensure sufficiency of the security posture.

Blockchain Enables Speed and Security

There are many innovative techniques and technologies, such as the “Method and System for Controlling Access to Data via a Data Centric Security Model,” designed to ensure the security and privacy of both insurance companies and their customers. But perhaps the most powerful — and transformative — is blockchain.

Blockchain is a secure, distributed ledger system that can be applied throughout the commercial insurance environment. An example may be found even in the traditional perspective of insurance for loss compensation, since blockchain can increase efficiency and reduce fraud in customer valuations and decrease improper multiple payments. For the insured customer who has sustained a loss, blockchain can speed up the review process, reducing claims paperwork and accelerating appropriate payments via automated smart contracts.

But as compelling as blockchain may be in traditional insurance areas, its greatest utility lies in the field of loss prevention and data protection. Blockchain can assist in securing the provenance of all insurance stakeholders, be it the identity of a truck driver or the integrity of a part inside the truck.

The Digital DNA of Commerce

On its surface, human activity is analog. But on a deeper level, it is digital (think DNA, nerve impulses, etc.) and even quantum on a deeper level. There is a saying in biology: “Ontogeny Recapitulates Phylogeny,” which states that the history of any entity maps its biological background. In other words, DNA may include that which came before it in the species’ — and perhaps the individual’s — development.

As with many innovative enterprises, blockchain is the digital DNA of commerce, of trust and of transactions for the insurance industry and its customers. Blockchain blocks chicanery, as it records, builds and expands on what came before it for optimum utility and growth.