Is the insurance industry ready for blockchain?

More than 2,000 movers-and-shakers in the insurance industry, more than 500 start-ups, and more than 200 prominent speakers descended at Insurtech Insights – a two-day event in central London last week.

The event claimed to be Europe’s largest gathering of insurance and insurtech stakeholders to foster debates around the most innovative technology topics impacting the insurance industry.

The event’s rich agenda was jam-packed with thought-provoking and insightful panel debates, which demonstrated the scale of activity, interest and conversations going on in the insurtech space.

Insurtech in itself is a fairly new concept and, even though it is a rapidly growing industry, the traditional insurance mindset still requires an awful lot of time and work in order to come in line with the digital age. With this in mind, one of the sessions that particularly stood out was the one focusing on blockchain and its integration into insurance.

Valid points

Moderated by Samantha Holland, partner at Gowling WLG, the panel included top representatives from MS Amlin, ChainThat, Blocksure and Stratumn, each of whom made interesting and somewhat valid points about the advantages that blockchain technology can bring for the industry.

Now, while that all is very interesting and exciting, it feels that the whole idea of integrating blockchain in insurance is somewhat an ambitious one. Given the time it is taking the insurers to warm up to the idea of insurtechs and the value these can add to them by digitising and/or automating the onerous processes, and unlock new opportunities, the idea of integrating blockchain might be a big ask.

The interesting part is that the traditional players understand and realise the need to embrace technology and innovation in order to stay relevant and in the game, however, the industry is still somewhat apprehensive. As highlighted by panelists, the real challenge is on an industry level first of all. For example: in the orchestration of technology integration into the industry as a whole, as opposed to a product or a process. But then there is also a challenge of changing the mindset of consumers and convincing the stakeholders as to what the real value of technology is and how it can change the way insurance is done.

Consumer need

One of the interesting points made by one of the panellists was the growing consumer need for on-demand insurance. This, undoubtedly, over time, will transform the way insurers deliver products and service markets that are currently massively under served – particularly the gig/sharing economy markets, the same way fintech has transformed the way we bank today.

While blockchain maybe a big ask and too much to comprehend for many, let alone the archaic insurance industry, insurtechs have definitely started the transformation of the industry already.

Take for example Tapoly, the fastest growing on-demand commercial insurance provider focusing on SMEs, self-employed, freelancers, contractors and anyone in the gig/sharing economy. The number of gig workers is expected to reach 1.4bn globally by 2025, with estimated insurance premiums of £280bn.

In the UK alone, the sharing economy today is worth £8bn and is projected to reach £140bn in 2025, while self-employment accounted for 45% of all UK employment growth since 2008. Impressive and encouraging indeed. We’re undoubtedly in a new era of work, and these new working patterns demand new ways of thinking about insurance. Yet, these key contributors and stimulators of the economy often face significant challenges when looking for commercial insurance cover that is as flexible as their needs, low cost, and can be obtained on-demand.

While blockchain might be a big ask indeed, at least for now, insurtechs are definitely a good start and an encouragement that the industry is moving in the right direction.