Blockchain Jeopardy!: A high-stakes game for the insurance industry

Just like contestants on the iconic game show Jeopardy!, the insurance industry finds itself facing an array of questions about a concept that holds immense potential: blockchain. A game of intellectual curiosity is unfolding. Like contestants seeking the right questions, insurance carriers, advisors and consumers are navigating the uncharted waters of this transformative technology.

Picture Jeopardy! contestants standing before a board of answers, pondering the correct questions that could unlock the doors to a more efficient and transparent insurance industry. The insurance realm continues to grapple with uncertainties surrounding this innovative technology. With each round of discussion about the potential, the application, and the impact of blockchain, the cenral question remains: “What is blockchain?”

Blockchain is building trust

Blockchain, a peer-to-peer distributed ledger technology, establishes trust through transparent and efficient data sharing. Blockchain digital databases efficiently disseminate copies of data preserved in blocks to all participants across public or private networks.

When data records in blocks are validated, the blockchain establishes an environment of trust. This business process enables like-minded partners to enter into new business engagements without protracted relationship building. Peers are democratizing data in such a manner as you remove the likelihood of corruption through accountability, transparency and chronology. As a result, high-fidelity relationships among parties are forged at a faster rate since the system of blockchain can hold everyone accountable.

Unlocking efficiency through blockchain

Imagine a digital time stamp propelling through a sequence of events, much like the rapid-fire questions and answers in a game of Jeopardy! In Jeopardy!, contestants must respond quickly and accurately to a series of questions, just as a blockchain time stamp records events with speed and precision.

Blockchain-influenced projects move faster along a timeline, similar to how contestants in Jeopardy! must think on their feet. Participants working on a blockchain leverage their wisdom and strategy, just as Jeopardy! contestants apply their knowledge to answer questions.

Efficiencies are revealed as workers are freed to focus on strategic aspects of their work rather than mundane tasks. Streamlining processes in a blockchain-driven environment is akin to the skills required to play a round in Jeopardy!

In Jeopardy!, trust among the host, the contestants and the audience is assumed. In the blockchain world, trust among parties is established through the technology’s inherent transparency and accountability features.

Efficiencies in blockchain have already manifested themselves in various industries, including the insurance space, where trust, accuracy and speed have become paramount.

• Streamlined Advisor Onboarding: Enhances identity verification and advisor contracting experiences.

• Underwriting Automations (Powered by AI): Speeds up decision-making processes in underwriting and deal making.

• Quicker Claims Adjudication: Accelerates claims resolution and enables cross-border functionality.

• Faster Payment Processing: Ensures timely remittance of producer commissions and client settlements.

While financial data predominates the blockchain, its flexibility is much greater. Diverse information like property records, underwriting automations, detailed medical history data, and even weather data can all be stored in the blockchain, much like how Jeopardy! questions cover a wide range of topics. Essentially, information about any asset that can be moved, exchanged, stored or transacted upon.

Global Changemaking: Public vs. private permissioned blockchain for enterprises

Bitcoin stands as a global example of blockchain’s distributed ledger technology (DLT), captivating the world’s attention with its decentralized nature. Yet, as we pivot toward mass enterprise adoption, the evolution of global blockchain for the insurance industry is more likely to unfold on permissioned private blockchains. In these controlled environments, central authorities offer the assurance and structure that corporate enterprises crave, fostering a greater willingness to embrace blockchain in their operations.

Allianz, a pioneering player in this arena, has set a significant precedent by adopting a private permissioned blockchain. Leveraging MSA (Microservices Architecture), Allianz uses three smart contracts to automate settlements.

“Hundreds of millions of euros worth of cross-border auto claims representing tens of thousands of claims across 25 countries in Europe,” reveals Bob Crozier, chief architect, head of blockchain for Allianz Technology. These are the numbers effecting change across the organization and the global auto claims landscape.

“It is the largest production deployment of blockchain in the insurance industry, with over 3 million transactions settled since the go-live date in May of 2021,” said Crozier. Allianz’s success with the technology is a true testament to the potential of blockchain DLT. It empowers reconciliation, validation and audit of claims data, revolutionizing cross-border motor insurance claims between Allianz Germany and Allianz Italy.

The result? Teams efficiently oversee inter-company workflows, expediting the claims process, reducing manual filing and billing, and substantially reducing errors while eliminating pending duties and obligations.

Allianz’s internal controlled model serves as an example of how to create operational success by applying the best attributes of blockchain.

Web 3.0 and disintermediation: the rise of fractional ownership

Web 3.0 is poised to revolutionize blockchain technology by introducing the concept of fractional ownership, igniting a profound shift in the ownership economy. In this new landscape, the Fourth Industrial Revolution unfolds as it fractionalizes ownership of blockchain-based projects, democratizing access and enabling individuals to own and influence projects that were once the domain of enterprises. This transformative process, rooted in disintermediation, is fostering trust among participants and fueling personal adoption rates, paving the way for a connected, trusted, high-fidelity Web 3.0 experience.

Fractional ownership redefined

Web 3.0 signals an internet of value. The very essence of ownership is being redefined.
Akin to a game of Jeopardy!, where contestants individually contribute to the growth and progress of the game, just as individuals take fractional ownership in blockchain projects. These projects, like Jeopardy! questions, are collectively tackled by like-minded participants and hold monetary value. As projects fractionalize ownership, individuals gain more direct control, thereby reinforcing trust among participants.

This paradigm shift allows individuals to monetize their contributions, creating a mutually beneficial relationship where value provided by each person is recognized and rewarded, similar to how Jeopardy! contestants are. Collaboration as a community of blockchain participants optimizes ownership rewards, opens doors to diverse working contracts, and transforms the way enterprises engage with individuals, offering innovative approaches to participation in blockchain projects as well as more traditional employment structures.

As the digital revolution unfolds, it extends a personal invitation to the everyday stakeholder, propelling us into an era of deeper connections, lasting relationships, and, above all, trusted experiences. Web 3.0, powered by fractional ownership, is a testament to the transformative potential of blockchain in reshaping our digital experiences and workflows.

Understanding disintermediation through fractional ownership & smart contracts

Disintermediation via blockchain signifies the elimination of intermediaries or middlemen in various transactions and processes using blockchain technology. Removing middle parties or parts through the blockchain’s automation nature parallels the concept of fractional ownership.
Fractionalizing ownership allows more individuals to become direct stakeholders in blockchain projects. In the insurance industry, this means that instead of relying on traditional intermediaries like brokers or underwriters, fractional ownership can enable a new, empowered workforce within the industry.

Allianz’s journey to success in the ICS (International Claim System) case is an example of solutions to real-world business problems for insurance carriers. When asked about disintermediation of roles in this transformation, Crozier stated that “this product was built to disintermediate the re-work, data errors and leakage which leads to more people working.”

While blockchain projects with this mutual goal in mind create a transparent ecosystem where trust is inherent, and the apparent need for intermediaries diminishes, they optimize collaboration and create a more effective workforce.

In a smart contract blockchain, computer code acts as the intermediary. “Smart contracts” are written as computer code in an “if…then…” format: if the conditions are fulfilled, then the outcome will automatically occur. Self-executing smart contract design automates and facilitates various processes. Participants who understand can interact with the code once the workforce has been empowered to understand it. This transformation encourages workers in the insurance industry to elevate their skills, drive meaningful impacts for their carriers and enjoy a more fulfilling work experience.

In essence, fractional ownership, combined with blockchain’s transparency and automation, can revolutionize industries like insurance, improve strategic business posture, disintermediate monotony and grow a novel, more confident workforce. Carriers, advisors and even curious consumers are buzzing with ideas about how blockchain can reshape the landscape.

Don't forget to read Part 1 and Part 2 of this series.

Sue Kuraja has been in the financial services industry for 20 years, with more than 15 years of experience in business development, scaling insurance and financial services product distribution. She is an avid researcher of emerging trends in the tech space and their ability to modernize the insurance industry. Sue is dedicated to transforming the insurance industry and growing tech-ed knowledge within the broader insurance marketplace. She may be contacted at [email protected].