Tag Archives: blockchain

Smart Contracts in Insurance

In the past years, we’ve seen a steadily growing interest in distributed ledgers and smart contracts. The financial industry has already been largely disrupted by these innovations. Although insurance has relied on conventional methods for decades, let’s explore the potential of smart contracts in the insurance industry, their limitations and the legal implications. 

In very simple terms, a smart contract is a software program that automatically enforces the agreement terms when certain, predefined conditions are met. In other words, a smart contract acts as a virtual intermediary that executes transactions between two parties. 

Ultimately, the insurance industry’s main challenge is a lack of trust and transparency between actors. According to Accenture, only 29% of customers trust insurers. This lack of trust is mutual. Fraudsters commonly make false claims in the hopes of receiving payouts, forcing insurers to put extra resources into the validation of every claim. With smart contracts in place, the trust problem can be at least partially eliminated while lowering administrative costs. 

The Potential of Smart Contracts

Traditionally, the insurance industry relies on a trusted intermediary to execute the transaction. The involvement of a third party makes the process slower and more expensive. It’s not uncommon even for uncontested claims require months to be processed. 

With a smart contract, no human interference is required. First, this helps mitigate the risk of manipulation by the mediator and increases transparency. Given that smart contracts are stored on a blockchain, both parties can see logged transactions. Second, it dramatically speeds up claim processing. Third, it lowers administrative costs for the insurer. As a consequence, companies can lower premiums, increasing market share. Fourth, neither insurer nor customer can “lose” agreement information, as policies are securely stored on the blockchain. 

The Limitations of Smart Contracts 

Smart contracts do have limitations. Currently, smart contracts can provide value only for the most primitive types of insurance cases. In very simple terms, smart contracts can operate only based on a conditional pattern of “if X, then Y.” 

Smart contracts become viable only when their conditions can be wholly transcribed into programming code. Unfortunately, this is a rather rare scenario, as a significant portion of today’s contracts are filled with nuances. 

For example, industry-specific concepts like “good faith” or “reasonableness” can’t potentially be expressed by the simple rules that smart contracts are currently based on. It would take an innumerable amount of code and resources to describe all possible contingencies and complex scenarios. 

Moreover, as insurance is a very conservative industry, many would hesitate to trust technology instead of a conventional third party. With smart contracts, we are not really eliminating the intermediary; we are just getting rid of the human factor and substituting computer code. While the code embedded in a smart contract has very little risk of being hacked, the code itself can be flawed. This is why smart contract security audit has now become a commonly outsourced service. 

See also: Where Blockchain Shines Right Now

Legal Implications 

With growing attention to blockchain and smart contracts, the first adopters of the technology have faced certain legal barriers. In 2019, the European Insurance and Occupational Pensions Authority set up Insurtech Task Force, which analyzes smart contracts in the legal context. 

The formulation of a solid legal framework will most likely take at least a few years. Currently, the widespread adoption of smart contracts is either risky or impossible, depending on the jurisdiction. For example, some experts argue that, under current U.S. contract law, smart contracts are perfectly enforceable. However, such conclusions are largely based on the exploitation of ambiguities regarding the use of electronic signatures. 

Smart contracts will most likely introduce new challenges in the legal landscape. The main value of a smart contract can be attributed to automated performance that can’t be altered. In insurance, this automation can complicate things. For example, if a party claims that there was no enforceable contract or that terms were not fulfilled, under the traditional approach the party could simply withhold payment, while the other party would open a dispute. With a smart contract in place, the funds would still be transferred, forcing one party to file a lawsuit to alter the transfer. Moreover, understanding smart contracts will require significant new skills for legal professionals. 

However, such roadblocks should be considered short-term. The potential for smart contracts in insurance is undeniably significant. Given the current limitations of the technology, we will most likely see smart contracts used first for simpler insurance processes like underwriting and payouts. For smart contracts to scale, we will not only need dramatic technological improvements but also significant changes in the legal landscape.

Where Blockchain Shines Right Now

Blockchain can be used in different domains, such as fintech, healthcare, manufacturing, tourism, real estate and government. It removes intermediaries from many business workflows. This helps organizations optimize costs and gain additional competitive advantages. Let’s go through blockchain use cases beyond bitcoin.

Blockchain-based supply chains

In a traditional seafood supply chain, for example, it is hard to trace illegal practices and product mislabeling. There are too many parties involved, with incomplete transparency about their actions.

Food safety and quality issues lead to parties mistrusting each other, which adds to the industry’s economic instability. Sustainability is also a growing problem, because more customers demand to know where their food comes from.

To solve these problems, blockchain consultants suggest implementing the combination of IoT and blockchain. The IoT part consists in tagging seafood items with sensors that gather and translate their location data in real time. Recorded on a blockchain, this data becomes available to all members of that blockchain, allowing them to track the food origin.

Thanks to blockchain, the supply chain can become transparent and trustworthy. It can also become faster and cheaper because of the automation of product location and status updates.

The same approach can be followed with other highly regulated products (such as pharmaceuticals) or high-value resources (such as gemstones and precious metals).

Everledger, a startup that recently secured $20 million in funding, created a blockchain use case in which each asset is assigned a digital fingerprint and tracked throughout the supply chain. This system provides all stakeholders with an immutable, forgery-proof record of each product’s origin. 

Distributed autonomous marketplaces

One of the main advantages of blockchain is its decentralized structure. That’s why in the future some blockchain applications may well underpin autonomous distributed marketplaces regulated by their users rather than corporations.

See also: Blockchain: Golden Opportunity in LatAm

Let’s consider the possibilities blockchain can bring to marketplace management. In the table below, there are marketplace aspects that a blockchain model would redefine:

An example of a blockchain-based marketplace is Australian startup CanYa. The company tries to differentiate itself from the competition by offering more transparency and trust. CanYa’s founders guarantee that paying clients will be satisfied with the quality of provided services, while service providers will be paid in full and on time. All this is achieved thanks to blockchain.

The startup also launched iOS and Android apps processing both fiat cash and peer-to-peer cryptocurrency payments. Their own cryptocurrency—CanYaCoin—is created to be at the center of the platform. It is designed into the innovative hedged escrow contracts that combat the notorious instability of cryptocurrencies.

Origami Network takes a different approach by offering developers a platform where they can create their own peer-to-peer marketplaces. Origami developed a set of blockchain-based standards and protocols, which businesses can use to create their own online decentralized shopping platforms and enjoy all the perks of the distributed ledger technology. 

The emerging smart marketplaces prove that blockchain use cases are not just limited to technological advancements but will also most definitely bring socioeconomic change through decentralized autonomous organizations, much like the internet did.

See also: Blockchain in Insurance: 3 Use Cases

Customer care, IP protection and beyond

If we fantasize a bit and extend what startup SimplyVital Health is doing with its ConnectingCare platform for tracking post-discharge patient care, similar advancement can be made in the field of tracking customer care and the quality of after-services using IoT data on blockchain. This way, you don’t have to worry about an employee forgetting about a tweet or a message from a disgruntled client.

Similarly, music and photography publishing is moving to blockchain, with products like Ujo Music that allow users to protect all rights to their creations by simply publishing them, without the notorious intermediaries. It’s safe to say the same is possible for tracking all types of intellectual property and payments to creative professionals to secure their rights.

Blockchain: Golden Opportunity in LatAm

Blockchain technology’s potential for disrupting the re/insurance industry is frequently mentioned, and it’s easy to understand why, given the nature and volume of data that flows between the insured, insurer, broker, reinsurer, service providers and other external stakeholders.

Something that hasn’t been discussed, however, is the extent to which specific markets, and those in Latin America, in particular, could be helped by this technology. That markets across the Latin American region could use blockchain technology to establish a new status as a role model for efficiency and technological development and a desirable place to conduct and attract business appears not to have been recognized.

Approached correctly, blockchain technology represents a golden opportunity to not only introduce real, tangible operating efficiencies into Latin American market practices and operations but also to transform the image of the region’s business environment and discard many of the long-held and damaging misconceptions.

Lack of transparency, lack of data integrity, inefficient and outdated business practices, poor claims data and excessive operating expense are some of the more common complaints of foreign management on the subject of their participation in LatAm markets. While these concerns are certainly not valid across the board, it is difficult to argue that there’s no substance to some of them.

Implementing blockchain technology into market practices could instantly address all of these issues by bringing total transaction transparency, providing consistent processes (vertical and horizontal) and introducing multiple transactional efficiencies, enabling significant time and cost savings.

Putting this in an operational context, during typical high-pressured renewal periods, underwriters would witness considerable reductions in valuable processing time and in the cost of placing their risks by eliminating the rekeying of data and eliminating duplicate tasks for the cedent, broker and reinsurer. The new policy as a “single source of the truth” has considerable benefits for all parties in the chain, not least removing the likelihood of costly future disputes.

As blockchain applications can be designed to process treaties, send notices to all participating parties and process the associated premium and commissions, technical accounting teams can be leaner and more focused on improving transaction efficiency. Payments no longer become stuck or withheld for unreasonably long periods, as all parties can access and follow the payment flow, thus freeing considerable administration time and assisting Treasury needs. Claims teams will see faster processing and verification of claims. Audit teams and compliance staff will enjoy the substantial benefits that transparency brings, especially around the burdensome “know your customer” (KYC) and anti-money laundering (AML) processes. The impact could be significant and enterprisewide.

These benefits could, of course, apply to most re/insurance markets. However, several markets in Latin America have particular characteristics that mean they stand to achieve potentially greater upside benefits and, from a practical perspective, enable easier implementation.

See also: Blockchain in Insurance: 3 Use Cases

First, several ecosystems in Latin America are already familiar with blockchain technology as a result of the wide adoption of crypto currencies and digital assets in the region. As blockchain technology is a key element of crypto currencies, a high level of familiarity and expertise with the technology already exists in the region, which re/insurance industries could leverage. As adoption of crypto currency continues to grow in markets such as Argentina, Colombia and Brazil, in particular, the use of blockchain technology will also grow, increasing the supply of resources with technical blockchain knowhow.

The structure of markets such as Argentina, Brazil, Chile, Colombia and Mexico, lends itself to an easier adoption of blockchain. There are relatively fewer players (than in, say, U.S. markets) operating in more localized markets, which makes intramarket collaboration – which is vital – much easier and quicker to achieve than in larger international markets, which are often more fragmented. In addition, the more relationship-oriented nature of the markets in these countries where there’s a higher degree of trust, long-standing bonds and greater familiarity between players will also induce a greater level of collaboration.

The relatively lower direct cost of labor in Latin American markets has in many cases resulted in unnecessarily high head count in back office functions performing menial, heavily manual tasks such as rekeying of data, repetitive receivables collections procedures and reconciliation work. This has often resulted in bloated expense ratios, less effective processes and additional HR burden. Blockchain will streamline many operational processes, significantly improving efficiency and minimizing headcount.

The regulatory and compliance burdens imposed on businesses in several Latin American markets are substantially greater than in many other international markets. This burden translates to increased expense as well as greater demands on valuable management time. Blockchain would bring efficiencies to the compliance and regulatory aspects of the business through transparent, consistent processing and more streamlined processes. AML and KYC procedures are obvious examples that would see immediate benefits. The potential gains are exponentially greater where the regulatory burden is heavier.

So, the case for blockchain in Latin American re/insurance markets seems pretty clear. The big challenge facing these markets lies in making the transformation and successfully managing the implementation of blockchain technology. Stakeholder collaboration is absolutely fundamental to the success of blockchain in any market. The technology needs to be embraced by multiple market participants, and serious conversations need to take place among the risk takers, the service providers and regulators and national associations before any transformation can begin. No single entity alone can make this happen; influential players that see themselves as leaders need to step up and drive the initiative into their markets.

While blockchain is long-established in technology circles, it is perceived as a UFO in re/insurance circles, too complex to understand and beyond the reach and comprehension of most operational management. It shouldn’t be. There are several solutions and advisers who are accessible and can assist the entire process from preparing feasibility and design to managing implementation. Blockchain is an active and growing sector.

See also: Is Blockchain Ready to Hit the Market?

Largescale adoption of blockchain technology in Europe and the U.S. has been relatively slow to date, which probably means international companies are unlikely to invest the required resources in their Latin American operations, at least until a proof of concept has been established in the traditional markets. The onus may therefore lie with the larger indigenous entities in the region to take the first meaningful step forward and begin the collaboration.

Whoever seizes the initiative and delivers this new world stands to gain not only financial and operational rewards but also recognition in a larger context: true recognition as a market leader in thought leadership and innovation. Opportunities to make such a profound impact on a market do not come around often.

COVID-19’s Effect on P&C: Opportunity for Tech?

The outbreak of the novel coronavirus (COVID-19) and the shelter-in-place response has wounded the US economy. Business and consumer-oriented economic indicators show the extent of the damage thus far, but economic data released in spring/summer months are likely to demonstrate further deterioration. The P&C insurance industry has not been immune to the economic fallout. The downturn is likely to strain underwriting profits, and the decline in interest rates and financial markets will undoubtedly impact net investment yields, which will exacerbate the industry-wide profitability efforts. The P&C insurance industry should expect differing impacts dependent on the insurance line. The line by line policy and loss impacts are studied within this article. Going forward, it is anticipated the pandemic response and economic downturn may expedite technological change and adoption, as industry players seek to maximize operational efficiency in a new world.

The Economic Downturn

The emergence of the pandemic has wreaked havoc on consumer activity, business activity and governments. Declines in manufacturing, residential housing, trade, business formation, and retail/food sales have all shown up in April’s economic indicators. These numbers are likely to worsen with May releases.

Figure 1:

Economic Indicators released in April indicated a sharp decline in residential and business activity.

The decline in residential and business activity underscored by worsening economic indicators (shown above) forced businesses to reevaluate their operations. Many have cut costs, including staff. This process has resulted in an unprecedented spike in unemployment claims.

Figure 2:

Unemployment claims spiked in April 2020

The recent spike in unemployment is extremely alarming, and despite efforts by government and the Federal Reserve to provide temporary backstops, the impact is already showing up in lower frequency economic indicators, such as Gross Domestic Product (GDP). In the first quarter of 2020, GDP was estimated to have declined by 4.8%. Interestingly, a significant piece of this decline was a contraction in healthcare. The “flattening of the curve” was a mantra aimed at ensuring protection of the healthcare industry during the global pandemic, but an associated decline in elective procedures has resulted in significant losses for many hospitals.

Figure 3:

While the GDP decline was worse than initial estimates and undoubtedly indicates the start of a severe recession, it came in below the measure hit in Q4 2008 when GDP declined 8.4%. It is expected that the 2020 downturn will worsen significantly when 2nd quarter GDP is released in the summer. Some are estimating a 40% fall in GDP in Q2, hinting at an economic depression. Hopefully, that will be avoided.

Impact on the Overall P&C Insurance Industry

The P&C insurance industry is not insulated from the economic fallout. The impact on business activity is expected to be felt in commercial lines and the effects on residential activity and general consumer activity are expected to show up in personal lines. The effects are expected to impact the P&C combined ratio through changes to premiums, losses and expenses.

A combined ratio above 100 indicates the industry is paying out more money in claims then it is making from policies. Due to effects on policies and losses the industry should expect an increase in the combined ratio. Adding to industry stress, net investment yields are likely to decline as well. The industry typically invests very conservatively, so interest rates are a good measure to track as a proxy. Recently the Federal Reserve responded to the emerging economic crisis by expanding the money supply and reducing the federal funds’ interest rate to near zero (again). The decline in P&C investment yields related to lower interest rates will constrain P&C insurance profitability further. The duration of ZIRP (zero-interest rate policy) will specifically impact areas of insurance with longer time horizons.

Figure 4:

The industry-wide P&C combined ratio is expected to increase while interest rates (and investment yields) fall.

Which Areas (in P&C Insurance) are Expected to Be Most Severely Impacted?

While the magnitude of the impact on the P&C insurance industry combined ratio remains to be seen, the economic decline associated with sheltering in place from COVID-19 is bound to weigh on P&C insurance. There will undoubtedly be changes in the demand for insurance and the new environment will lead to alterations in insurance claims and losses. Down the road, this may also lead to changes in regulation and could even generate new business models.

Given the nature of the pandemic, it is challenging to predict all implications for insurance. A recent survey from PwC, for example, explored some potential areas of concern with finance leaders related to COVID-19 and found the following concerns rose to the top.

Figure 5:

These themes are also relevant for leadership within the P&C insurance sector. The entire insurance value chain — from policies, pricing and distribution; to underwriting and risk management; to claims and servicing; to finance, payments and accounting — will be impacted in some manner. The industry will have to navigate operational pressures as more employees work-from-home, while simultaneously finding ways to optimize profit as general business activity pulls back and the economy contracts. If premiums decline or losses spike, insurers will need to find ways to cut costs. Yet, each line of insurance will experience policy and loss effects differently. Figure 6 analyzes the directional impact to each line of P&C insurance.

Figure 6:

Premiums are likely to contract across a variety of lines of insurance as the economy weighs on new exposures and causes early policy cancellations. General auto and air traffic will decline as more people stay home. The uptick in unemployment (shown in Figure 2) will undoubtedly show up in reduced premiums for personal auto, aircraft and commercial auto. The reduction in in workforce along with movement to new work-from-home environment may also result in businesses cutting workers compensation policies. COVID-19 and associated isolation policies impacted global trade (Figure 1) and business projects, which will reduce policies for various lines like ocean marine and surety. Areas related to housing, like homeowners or mortgage guarantee, may have some short-term stability, but long-term risk as foreclosures spike. Cost cutting, particularly within small business, is expected to constrain property premiums as many businesses consolidate. Finally, medical malpractice may see a reduction in policies particularly if the non-COVID healthcare slowdown (shown in Figure 3) continues and more hospitals cut back on elective procedures and associated expenses.

As shown in Figure 6, claim losses are also expected to vary by line. Reduced business and personal activity is expected to lower losses in a variety of lines, including auto, airlines and ocean marine. Credit, mortgage guarantee and surety losses are expected to increase as the economic downturn causes capital challenges and project cessations. Homeowners may see a slight uptick in losses as more residential activity takes place at home, due to school cancellations and work-from-home policies, thereby increasing risk.

Business interruption coverage, which can be included in property coverage (for example), is an area of question. This coverage indemnifies companies for lost profits for nonexcluded risks, yet outbreaks of disease are generally excluded. Certain policies include coverage for “interruption by communicable disease.” Even with this language included, some policies still exclude contamination due to a pathogenic organism, bacteria, virus or disease. There are a lot of elements to consider with this issue. Therefore, it is likely there will be challenges and litigation related to business interruption.

Why the Pandemic May Be a Catalyst for Tech-Adoption in Insurance

The P&C insurance industry was thrust into a new business environment due to the global pandemic. Within a week a relatively manual industry, which relies heavily on face-to-face interaction, showed an impressive ability to adjust and leverage technology to continue to provide products and services. While some firms within the insurance industry had already made strides in tech-related innovation and automation prior to the pandemic, the industry as a whole has been somewhat reluctant to adopt emerging technologies. On the surface, it may seem unlikely that the efforts over the past few months may have lasting impacts and change tech-adoption rates within the industry. Digging deeper, the pandemic and the associated economic fallout may windup being the key catalyst for widespread tech-adoption within insurance.

Prior to the pandemic the stage for large-scale technological adoption within insurance was already set. While the economic downturn will lower the quantity of available start-ups and InsurTechs, the quality and adoption rates associated with InsurTech may increase. In addition, the count of internal projects for brokers, carriers and reinsurers leveraging new technologies has been rising over the past few years. Industry organizations had already understood the importance of innovation, yet had less reason to trigger production usage. Some forward-looking credit agencies understood the industry-wide hesitancy and have created scores for innovation. AM Best released its innovation score methodology in March, 2020. They explain that these company-specific innovation efforts (or lack thereof) are likely to have a long-term impact on an insurer’s financial strength. Put differently, in order to profit maximize, insurers need to innovate. In this new world, they need to do so now.

While innovation can include elements outside of technology, much of it is directly related to technology. A notable constraint to technological adoption within insurance has been lack of customer adoption. Telematics, for example, has been around for an extended period of time, but never experienced robust demand. It’s possible the pandemic could change this. In an environment where miles driven has collapsed and more customers are now unemployed, Telematics and Usage-Based-Insurance (UBI) may provide angles for auto insurers to maximize retention of policyholders. The cost-benefit for consumers to exchange private information for a reduced rate is likely to be changing as well.

One major challenge with consumer and business-adoption of internet connected devices, like those proposed with UBI, has been data security risk. There are still some concerns, but security is slowly improving and the risk is becoming more manageable. It’s likely that there’s a methodical upturn in IoT usage over the next few years, but any increase in insurance usage will be deliberate focusing on areas where security is tight. Interestingly, the large scale public adoption of IoT-oriented devices and the data streams associated may also present new insurable opportunities, while simultaneously providing insurers with an ability to further improve operational efficiency through automation.

It was shown in Figure 6 that certain insurance lines are expected to experience an increase in losses as the economy flounders. Some of the increase may wind up being attributed to fraud. AI and machine learning systems may help reduce the cost of reviewing potentially fraudulent transactions identified by traditional rule-based systems. An additional benefit of cognitive fraud detection systems is that they can detect fraud patterns that humans may overlook. This can help save insurers money in a challenging economic environment.

In an era where insurers are aiming to maximize policies while reducing expenses, AI may also be able to help. Artificially intelligent systems have been developed to read contracts, assess which areas of potential risk, and even offer suggestions on how to improve the terms of the contract.

Blockchain may be another useful tool as it emerges through the ‘trough of disillusionment’ towards production usage. According to Gartner, Practical Blockchain is a Top 10 Strategic Technology Trend for 2020. Within insurance, The Institutes RiskStream Collaborative has been working with roughly 40 P&C and L&A insurance-related organizations to design use cases for life and annuities, personal lines, commercial lines and reinsurance over the past few years. RiskStream had expected a downturn in industry participation in our working groups and committees due to COVID, yet we have been surprised to witness more participation. This may be another signal that the pandemic and economic downturn is causing industry participants to re-evaluate the need for cost savings through technology.

The timing of involvement in industry-wide initiatives may be also be ideal. RiskStream’s Proof of Insurance and First Notice of Loss solutions described in the video above, have moved through multiple path to adoption steps with members. Therefore, the associated ROI is within reach. Once adopted, it’s likely the path forged within these personal lines areas will allow for easier adoption of use cases being designed/built in other areas, such as commercial lines, reinsurance and life & annuities. RiskStream’s is not alone in demonstrating progress within blockchain. Other industries are also noticing advanced interest in their blockchain initiatives, such as MOBI (in mobility), BiTA (in logistics) and OCC (in energy). Each of these initiatives may also be of interest to insurers.

Whether insurers decide to leverage IoT, AI, blockchain or other forms of technology, there’s little doubt that firms that have made technological adoption progress have more room to withstand the economic downturn’s effects. This article demonstrated that the economic downturn will effect insurance, but also showed each insurance line will be impacted differently. The ROI of technological adoption is dependent on the underlying technology and the specific use case. While use cases for various tech have not necessarily grown since the onset of the pandemic, the overall economic environment has worsened, increasing the need for immediate operational efficiency. Insurers will be required to produce more with less resources. Optimization within the insurance industry, and business overall, will likely be more and more important in a world that is volatile and changing. Careful investment in technology is likely to be a useful resilience tool for insurers in this new, volatile environment.

***Special thanks to RiskStream’s Susan Kearney for offering your business insight and assistance with this project.


Time to Retire the Term ‘Insurtech’?

When I founded and edited what became known as a “new economy” magazine in 1997, to explore all the strategic possibilities created by the internet, a friend told me a curious thing.

“You know,” he said, “there were magazines with names like Popular Electricity back in the early 1900s, when it was this great new thing. Then electricity just became part of daily life, and the magazines went away.”

Sure enough, after half a dozen fine years, my magazine, Context, faded away, as did all the similar publications, including Business 2.0 and the Industry Standard, which once were so thick with ads that they looked like phone books.

It may now be time to start retiring the term “insurtech,” too.

It’s not that technology is no longer a key driver for the insurance industry. Far from it. In fact, the pace of innovation has been picking up for years as companies have become more knowledgeable about the possibilities of various technologies, about how to incorporate them and about how to innovate, in general. Now, COVID-19 is making the industry step on the accelerator because so many interactions must happen virtually.

The issue is that technology is now so ubiquitous that it’s time to stop treating it as this new, alien thing. Yes, the many technologies now at the industry’s disposal — blockchain, the various flavors of artificial intelligence, etc. — are wildly complex. But so is the laptop or phone you’re using to read this right now, yet you treat your device as a tool, a simple extension of your hand or your brain. It’s time to start thinking of insurance technology — not insurtech — the same way.

We’re solving business problems, not technology problems, as we innovate within our organizations. We want to have the most efficient operations, the smartest underwriting, the fastest and smoothest claims processes for clients. Technology will play a role almost everywhere, often a key role, but the goal isn’t simply to have the best AI or the coolest blockchain application.

The industry has been migrating toward a more balanced view of technology and innovation. You see that, for instance, as companies try to rethink the customer journey, where the focus is squarely on the customer and where technology facilitates much of what happens, but in the background.

Some technologies will still require great attention, in and of themselves. Something like blockchain, for instance, could provide a competitive advantage if you figure it out before your competitors, or it could be an expensive bust for you, so you need to develop a deep understanding of the technology. But even with something like blockchain, you’re starting with that business problem you’re trying to solve.

I suspect the term “insurtech” will play out rather as “digital strategy” did at the consulting firm that published my magazine.

When the late, great Mel Bergstein founded Diamond Management & Technology Consultants in 1994, he had the then-radical idea that digital technology could drive corporate strategy, rather than just be an afterthought. The firm did a lot to popularize that concept, especially when one of our partners, Chunka Mui, co-wrote a best-seller in 1998, “Unleashing the Killer App,” whose subtitle was “Digital Strategies for Market Dominance.”

The notion of digital strategy stayed popular through 2010 or so, I’d say, and plenty of consulting firms will still sell you one, but every strategy has a digital piece to it these days. Try to imagine a strategy that isn’t digital. So, “digital strategy” has gradually become “strategy.”

Likewise, while a few people still talk about “e-commerce,” it mostly has a simpler name: “commerce.” Amazon was treated as a technology company for the longest time even though it sold books. Now, it’s treated as what it is: a retailer (that’s extraordinarily sophisticated in its use of technology) and a provider of technology services through its AWS cloud business.

“Insurtech” hasn’t been around nearly as long as “digital strategy” or “e-commerce,” and the combination of insurance and technology in innovative ways will only pick up speed from here. But the innovation needs to happen as part of, well, the normal innovation process and not as a sort of excursion into foreign territory. So, I think “insurtech” will soon enough be referred to by a different name: “insurance.”