Insureblocks is a dedicated weekly podcast on blockchain, smart contracts and distributed ledger technology (DLT) in the insurance industry. Hosted by Walid Al Saqqaf, this podcast will invite expert speakers from incumbents to the most promising start-ups in London, New York, Zurich and around the world. Insureblocks is the best way to not only understand the basics of blockchain but to also hear about proof of concepts, what insurance companies have done, their learnings and the end results. Whether you are new to or an expert on blockchain and would like to understand the impact it will have on the insurance industry, this is the podcast you'll want to tune into.
Ep.19 – Insurwave: the insurer’s perspective with MS Amlin and XL Catlin
Insurwave, the new marine insurance blockchain platform launched by EY, Guardtime, Microsoft, Willis Tower Watson, XL Catlin, MS Amlin and ACORD and piloted by Maersk has been a recurring theme here at Insureblocks.
In a previous episode, Insurwave - a Maersk pilot for marine blockchain insurance, we examined the client’s perspective. In a more recent episode, Insurwave: the complete story with EY, we discussed the process of creating Insurwave. To complete the circle, today we will look at Insurwave from an insurer’s perspective.
For today’s episode we were lucky enough to have two speakers, Madeline Bailey, Head of Strategic Initiatives at MS Amlin, and Hélène Stanway, Digital Leader at XL Catlin.
Blockchain in two minutes
Blockchain is a distributed ledger that allows users to share data in real time in a secure and immutable way. This data can be related to assets, for example the location of a vessel, or it can be a smart contract, a piece of code set to execute when a set of specified parameters is fulfilled.
Blockchain has the potential to create trust between parties in the insurance industry and improve risk intelligence, lowering costs and benefiting parties across the insurance value chain.
In the past four years the marine insurance industry has experienced declining performance and increasing combined operating ratios. It has become necessary, therefore, to take a strategic look at the industry and consider how new technologies can improve efficiency. In building Insurwave, both MS Amlin and XL Catlin were willing to take a leadership position in the insurance industry and commit to a vision of how the industry is going to develop.
In an industry not known for embracing change, developing Insurwave came with challenges. Working alongside competitors and completely re-inventing the underwriting process is not something insurance companies have done before. However, every participant was keen to grasp an opportunity to cooperate with representatives across the value chain and consider what each needs out of an insurance transaction to re-imagine the underwriting process.
The low margins plaguing the insurance industry posed an additional challenge. Unlike usual, well defined projects, it is harder to quantify the costs and benefits of investing in innovation. For that reason it was important to have a clear set of goals with Insurwave. One of the main factors Insurwave has been successful is its focus on providing hull and war cover for its pilot with Maersk.
Insurwave allows parties to seamlessly share data between them. By combining blockchain with IoT data, parties have access to real time information. At the moment Insurwave provides over thirty data points per vessel. The aim is to get to fifty. Insurers get more data, get data of different types and get it in real time.
Up until now, insurers traditionally looked backwards to quantify risk. This means the insurance industry has yet to come up with a definitive answer on how to use all this new data but Insurwave opens up a range of new possibilities.
Ep. 150 – Bringing innovation into the Polish Financial Sector with the Blockchain Sandbox
Blockchain Sandbox is Poland's first business and technology platform designed to accelerate the development of innovative blockchain solutions within an isolated system that simulates real world production environment. To take us through this innovative solution we are joined by Dorota Dublanka, President of the Foundation Cyberium and Head of Human Resources at KIR along with Maciek Jędrzejczyk, Blockchain Technical Leader at IBM for Central and Eastern European Region and lead architect of the blockchain sandbox.
What is blockchain?
Dororta defines blockchain as a list of records that is stored on a wide range of computers. She also refers to blockchain as lego blocks where different participants join together to build a tower together whilst verifying each blocks added to the structure and exchanging information between each other.
Maciek’s defines blockchain as a database with a very specific data structure whereby transactions are put together into a block representing an interval of time between the recording of a previous state and the current state which is going through the approval process. Each block is cryptographically linked to previous blocks and the governance over how the data is stored on the chain is determined by the network. The network decides whether or not certain transactions are going to be included within a block or not.
State of innovation within the financial sector in Poland
Maciek states that to understand the state of innovation in the financial sector in Poland one has to go back 30 years to 1989 – 1990 when Poland transitioned to a market economy. At that time there was no digitisation and computers were virtually inexistent. The financial infrastructure was nearly all paper based. Everything had to be created from scratch which represented both a set of challenges and opportunities for Poland.
Poland had virtually no technical debt, or legacy IT infrastructure within its financial services sector that other countries in Western Europe or in North America had. This enabled the Poles to choose the best and most flexible solution to their specific needs. As the Polish leadership and society were very curious they were also very open to innovation.
Dorota added that, Poland has a relatively high social acceptance for innovative solutions. Poland has one of the highest percentages of mobile banking and debit cards users in Europe. Because of its embracing approach to innovation, Poland has adopted a lot of the most innovative platforms for payment solutions and its IT professionals rank as some of the top 10 best in the world.
The Blockchain Sandbox
Blockchain Sandbox is here to accelerate the development of innovative blockchain solutions in Poland. They aim to demystify what is blockchain and break the view that it’s only related to cryptocurrencies. They wish to develop blockchain technology to support entrepreneurs and companies to access solutions within the sandbox.
Startups and major companies who join the sandbox with innovative ideas can leverage blockchain within the sandbox for developing their applications and business solutions. They will also receive support from the blockchain sandbox founding members.
Foundation Cyberium is the leader of the Blockchain Sandbox. The founding members are PKO Bank Polski, a href="https://www.kir.
Ep. 149 – Innovation and blockchain in the insurance industry – insights from MSG
Bernhard Lang, Member of the Board at MSG System, joins us to discuss innovation and blockchain in the insurance industry. In this podcast we discuss the importance for the insurance industry to remain relevant in an ever changing market. How making innovation a corporate discipline and embracing a customer centric approach to remain engaged in customer ecosystems is critical to that objective of relevance.
What is blockchain?
From a non-technical point of view blockchain is a form of digital representation of what we naturally do in real life. We want to be part of social communities within which we communicate, make agreements, state facts, and make promises that are then known to the people within the community as a current status of things or an evolving collective truth.
The technical definition of blockchain is that it’s an immutable and distributed technology that enables the creation of new business scenarios. According to Bernhard, too often blockchain technology is looked at from a technology angle first before a business one. He personally prefers that we start with a business problem and then identify blockchain technology if it is the right one for the business problem.
Bernhard Lang has been with MSG for the past 25 years. MSG is a German product based system integrator. MSG focuses on 10 different lines of business. Their business strategy is to develop industry specific content, software assets, software solutions, that go very deep into the lines of business along with a consulting services associated with it. The majority of MSG’s business is within insurance but also looks at other industry verticals such as banking, public sector, automotive and others.
In addition, MSG works with startups such as Ritablock (featured on Insureblocks: Ep. 124 – Reinsurance accounting blockchain, Ritablock integrates with B3i’s Fluidity platform) and they have co-developed the SAP FS-RI (financial services reinsurance), which has become the market standard for professional reinsurance companies and for cedents.
Outside of reinsurance, MSG has partnered with Marco Polo, a trade finance blockchain solution, to help them integrate with SAP European Systems.
Insurers approach to blockchain in comparison to mature platforms like SAP
Bernhard believes the insurance industry is quite open to blockchain technology however he notes that the materialisation of previous blockchain investments haven’t been that great. Consequently he believes that in the future the insurance industry might be more cautious to making investments in blockchain.
MSG has an innovation lab in Canada called Cookhouse Lab. In May 2017, they launched a four week design thinking blockchain workshop along with seven insurance companies where they identified 34 uses cases and created three prototypes. Whilst there was a lot if interest at that time, Bernhard would qualify the output as having had a limited impact and not significant enough to be considered a game changer.
Whilst he believes insurers will keep looking at blockchain technology few will expect high returns.
Evaluating new innovative technologies within the insurance industry
Bernhard candidly describes the decision making process within insurance companies as being...
Ep. 148 – Challenges and opportunities of blockchain in the insurance industry – insights from IBM
Mark McLaughlin is IBM’s Global Insurance Director, leading IBM’s Global Insurance strategy, solutions, and partnerships. Mark’s teams analyse trends in the insurance business and in technology, predict strategies for insurers, and build IBM insurance solutions to meet insurer needs. In this podcast we discuss the challenges and opportunities of blockchain in the insurance industry with special insights from IBM.
What is blockchain?
For Mark blockchain is a trusted shared ledger. It enables business entities with different interest and different goals, that may not 100% trust each other, to establish a common ground where a set of documents, processes and data is maintained by a group across a business network.
It is maintained in a way that is immutable where everybody can see the changes that are going on and where everybody has a record of it. Blockchain also have features like smart contracts that can help automate business processes in a trusted manner by all participants.
Mark points out that there are a lot of different things you can do with blockchain from digital currencies to running shared business processes.
How has insurance embraced blockchain technology?
Mark believes insurers are feeling the heat on innovation due to the 46% CAGR on Insuretech investment and the entry of large players like Ping An and Amazon into online distributed type insurance ventures.
Insurance being baked into other industries such as the purchase of an airline ticket in the US now comes with the offer of travel insurance as part of the process.
The insurance industry knows that they have to figure out ways to connect to broader ecosystems and to innovate. Blockchain is one way of doing that. Whilst insurers have a high level of interest in blockchain they have had a little trouble getting started in some cases.
Blockchain has great potential as a technology and an increasing number of insurers are willing to embrace it. The challenge however is with the business model. Other technologies such as AI (artificial intelligence) do not have the same challenge. AI is very easy to visualise, it can be used to better process a claim, underwrite a risk and advise an insured.
Blockchain is a little tougher. The challenge isn’t the tech it’s the use case behind the technology. Insurers who have been successful at using blockchain are those who have correctly defined the business value. It is however a very tricky exercise because blockchain is about creating networks and you have to ensure that the value line up across all the players within that network.
Digitising business during COVID
There is a tonne of complexities in the insurance industry and people tend to stick to the process they know because they know how to manage the complexities within that process.
However, some forward-thinking companies have during this COVID world looked at digital interactions and how they can rethink their business to leverage new technologies. For Mark, It is about “how do I build better interactions with my end user? How do I get closer to risk? How do I do a better job of providing personalised and customised advice around that risk? How do I connect relevant products and services at the point of risk?” Insurers that can figure that out and do that at scale will be the most successful ones in the future.
Approaches to innovation and blockchain
Too often insurers judge innovation in its ability to sell more of their existing products. The more successful insurers are those that think “Instead of how do I take my existing policies and my existing business and adapt th...
Ep. 147 – Challenges of adopting blockchain from a governance and risk standpoint
Dr. Denise McCurdy, Blockchain Governance Advisor at Grove Gate Consulting along with Tom Fuhrman, Blockchain & Cybersecurity Consultant at Vector MV, join us in this podcast to discuss the challenges of adopting blockchain from a governance and risk standpoint.
Denise is a blockchain governance advisor who has written a doctoral dissertation on blockchain with a special focus on supply chain and governance. She’s also the VP of blockchain governance for a supply chain and logistics startup.
Tom Fuhrman is a blockchain & cybersecurity consultant specialised in cybersecurity consulting for the last 25 years. Recently he has extended his scope into blockchain consulting, where he focuses on strategy, governance, risk management, and specifically looks at the intersections between blockchain and cybersecurity.
What is blockchain?
For Denise, blockchain is a database shared across a network of computers. As a record or block gets added to that database the blocks are chained together. Records on the blockchain are very difficult to change because each block has a hash which refers to the previous block. So, any change of a block requires a change of the entire chain. It is this attribute of blockchain which makes it very secure.
For Tom, blockchain is a shared, continuously updated immutable database. It represents a single source of truth amongst trustless participants. As Tom is a cybersecurity expert he believes that blockchain inherently has two of the three attributes that cybersecurity requires:
* Integrity because of its immutably nature
* Availability because it is distributed
* Confidentiality isn’t something that blockchain has inherently but it can be added with encryption
Tom also reminds us that blockchain exists in two basic design philosophies: public permissionless and private permissioned. Permissionless is most famously known via Bitcoin where anyone can participate at any level. Everything is decentralised and transparent in a trustless environment.
A permissioned blockchain has a restricted access. It isn’t as decentralised and they require a certain degree of trust.
What is governance and its impact on blockchain and its members?
Governance is about agreeing upfront the rules and the processes and what to do when things go wrong. It’s a system of rules that helps govern an ecosystem of players in how they can interact.
Whilst working on her dissertation Denise started to interview supply chain business people who were trying to deploy a blockchain solution. During her interview she kept hearing that it isn’t about the technology but instead, a real lack of clarity around how firms need to work together much more closely than they're used to doing due to the nature of blockchain. What her interviewees were expressing was the need for a governance framework, or playbook.
Blockchain impacts its members because they now have to share business processes, confidential information and intellectual property. It’s synonymous to them having to expose the underbelly of their organisation in ways that they haven't had to do before.
This closeness of sharing sometimes blurs the lines in their eyes of where their company ends and others begins. For many this is a cultural shift which many companies are not used to.
For Denise one of the key governance challenges is understanding the amount of changes that people and firms are going to have to do.
Collaborative governance as a key mechanism to removing obstacles
Collaborative governance is a particular type of governance that in Denise’...
Ep. 146 – Self-Sovereign Identity and IoT – insights from the Sovrin Foundation
Michael Shea is the Managing Director of the Dingle Group and the Chair of Sovrin Foundation’s SSI in IoT Working Group. In this podcast we discussed the white paper he authored on Self Sovereign Identity and IoT. To explain the opportunities SSI can provide to IoT, Michael introduces us to three profiles: Jamie (machine to person), Bob (machine to machine) and Bessie the cow (digital twin).
What is blockchain?
Blockchain is a decentralised database, which is cryptographically secured and immutable. The decentralised part means that it operates in a wider ecosystem than traditional ones, that sits within corporate firewalls, which gives it greater resiliency and redundancy.
The cryptographic component along with the different proof of work, resolve the double spend problem and bring a level of assurance that transactions have not been modified.
An introduction to Self-Sovereign Identify (SSI), Decentralised Identifiers (DID) and verifiable credentials.
Self-sovereign identity is an identity model, where an entity is in control of its own identity and information related to it. SSI as a concept started to take shape in 2016 with Christopher Allen’s 10 principles of self-sovereign identity. In December 2020 the Sovrin Foundation released its 12 principles of self-sovereign identity, which fundamentally is about an entity’s ability to control the information about themselves.
Decentralised identifiers (DIDs) is a pointer to the identify information known as a DID document that helps to create the trust layers within SSI.
A verifiable credential is a cryptographic bundle that is created by an issuer of a credential such as the DVLA for a driver’s license. That credential includes attributes stating that the driver is legally entitled to drive a vehicle and it may contain other pieces of information such as your address and other details. A cryptographic bundle is signed using the public private key of the issuer in this case the DVLA which is then returned to the holder of the driver’s license. That holder can then use that credential to a verifier to indicate his/her authorisation to drive a vehicle.
Internet of Things (IoT)
Machine to Person
Machine to person is where a device is interacting with an individual. The machine can be attached or worn by a person and is measuring some aspect of the person's personal or physical environment and transmitting this data directly or indirectly to a connected device. For example, a person with diabetes would have a sensor that is attached to their body reading their glucose level and communicating the data to an app on a smartphone or a separate physical device.
Machine to machine
Machine to machine is the communication between an IoT device and a computer, smartphone or device. Using the above analogy, the machine is the device or the smartphone speaking up to a central repository for transmitting that information to an endocrinologist on behalf of the patient.
A digital twin is a virtual digital representation of a physical object. That can be a person, an animal, or a thing.