Blockchain Applications in Insurance: Developing a Plan for Smart Insurance Policies

Description

Blockchain is rapidly emerging as a potential solution for businesses in many sectors, often with promises of increased security, reduced risk, and higher efficiency. With any new technology, however, comes new threats. Counsel and risk management professionals should understand, assess, and plan for the blockchain-related risks that organization will face.

Blockchain technology is transforming the insurance marketplace. Insurers are already adopting blockchain to: (1) streamline reinsurance contracts; (2) create new wholesale insurance products; (3) improve claims management; (4) refine reserve calculation; (5) automate notices for claims and losses; (6) evolve underwriting models; and (7) strengthen fraud detection. Implementing blockchain could provide access to new insurance markets and increase administrative efficiency by reducing overhead, improving underwriting accuracy, and transforming claims management.

Counsel should prepare policyholders to adapt to the blockchain transformation and the placement of smart insurance policies that minimize the adverse impacts of both automation and commodification. Policyholders should weigh the benefits and risks associated with: (1) allowing greater access to proprietary data; and (2) allowing automation of portions of the claims process, which could reduce control over key coverage decisions.

Listen as our authoritative panel discusses the impact of this emerging technology on the insurance marketplace and presents best practices for legal counsel, risk managers, and insurance professionals on mitigating the risks associated with early adoption.