Can Blockchain Make Data Integration A Reality For Insurance Companies?
When most of us hear the word “blockchain,” we think of cryptocurrencies like Bitcoin.
But can blockchain technology be used to improve insurance processes?
Tram Vo, CEO and founder of the Mobility Open Blockchain Initiative (MOBI), sees the appeal.
MOBI is a nonprofit consortium that creates standards and builds a Web3 infrastructure for connected ecosystems and Internet commerce. In a nutshell, this means that the group uses modern technological advances – including blockchain, smart devices, cloud computing and machine learning – to drive the creation of new business models.
Earlier this week, Vo spoke with Joan Zerkovich, senior vice president of operations for the American Association of Insurance Services, during the AAIS Pulse Chicago event.
“Even though the word blockchain is in our name, we think of it as just one tool among many in our toolbox,” Vo said. “So, the convergence of all the technology that you see here will come together and will give any connected device a trusted identity and enable them to communicate and transact with each other securely without having to go through a centralized platform like Google or Facebook, for example.”
This is a key principle of blockchain technology. Blockchains operate on decentralized networks – a different model than the centralized databases that have typically stored data for years. The latter are expensive and prone to cyber attacks that can result in large losses. Meanwhile, decentralized networks can enable companies to securely tap data in new ways without risking the loss of important personally identifiable information.
In one example, Vo shared how onboard telematics information stored on vehicles has been underutilized because companies are afraid of what might happen if that data is passed around.
“GM, On-Star – all that data is still sitting somewhere,” she shared, “with a lot of data that’s not being used. And if you can use that data, that would be amazing.”
Vo talked about how companies like State Farm and Swiss Re are “very interested in utility-based insurance.” (Both companies are part of MOBI’s task forces.) While vehicles are parked at homes most of the time, policyholders don’t want to pay insurance if they don’t use their cars. And the insurance companies take note of that.
“So, certainly MOBI, with its unique digital identifiers and a network that helps you find things and get information about those things, will be of great benefit to the insurance industry,” Zerkovich said.
“Think of it (as), we’re essentially building a network of roads and highways,” Vo said. “And then you can use that to communicate directly with somebody, and be able to exchange credentials and be able to do business.”
She continued: “Keep in mind that we are not building any databases. We’re just building the infrastructure so you can communicate in a way that preserves user and provider privacy and interoperability using the internet.”
Near the end of the presentation, Zerkovich shared that “the real point here is that you can’t wait until the system is built to really take advantage of it, or to make sure it works for your business. Getting your business involved today is really about making sure you’re up to date, you know how to take advantage of this new technology, and it was shaped in a way that fits your business.”
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