Tag Archives: ucc

Why Blockchain Matters to Insurers

First, a definition. Distributed ledger/blockchain technology, increasingly abbreviated as “DLT,” transfers value in a decentralized, consensus-based and immutable manner using cryptographic tools and is different from technology today because it offers transactions occurring between unknown counterparties that are mathematically trusted in real time. DLT is at once a network and a database that can host applications like Smart Contracts, with the potential to be interoperable across trade ecosystems. This technology seems tailor-made to help administer the claims end of insurance.

Let’s talk about claims. It is well known that insurance claims are the storefront of an insurance business. Claims processing and resolution provide touchpoints for extended customer engagement, and a bad experience can poison an insurer in a customer’s mind, which can affect policy renewal. The claims experience should be seamless and easy to manage for all.

Imagine if you could smooth out your claims process so that it is more accurate, frictionless and cost-efficient and can even provide easy access to data for benchmarking and analysis to improve your customer’s digital experience.

See also: What Blockchain Means for Insurance  

I had my “aha” moment when I first learned about DLT technology. I was struck with an immediate vision of how things could be made better within the insurance industry. As a prior general counsel of an insurer, and now a consultant specializing in the strategic use of this technology, I understand how it can be implemented (once fully developed) and can envision how it can change and improve business from end to end.

Practically speaking, on the claims side, at the very least, the industry would never again have to suffer “the dog ate my homework” excuse for lost documents, duplicate or other document mishaps and related lawsuits. Claims provenance could be automatically established and adjudicated by so-called “smart contracts” (in the most general sense, they are protocols that have deterministic outcomes) in real time with an easily auditable and immutable trail. Identity proof would be less onerous. Those developments alone go a long way to reducing fraud and risk and their associated costs.

While modernizing claims processes is not a “sexy” thought, it is one that directly affects all insurers and their bottom lines by reducing risk. A small shift in the actuarial calculation based on a risk reduction goes a long way. There is not a business person on earth who does not want to increase revenue.

While there is a lot of hype, I believe we are only seeing the beginning of its potential. Education is needed. Imagination is needed. And innovation and execution are needed. The financial services industry has looked at this technology over the past year and is engaging with it, and some practical applications are expected to go into production in 2017. Insurers/asset managers should take notice. For instance, Delaware will begin using blockchain technology for UCC filings powered by Symbiont. Financial industry regulators, both domestically and internationally, are evaluating this technology and are listening and learning. In part, we owe the financial services sector a debt of gratitude for creating awareness overall.

Generally speaking, insurers have been slow to the table to learn about this technology, but it is imperative that they engage as early as possible because DLT has the potential to be very valuable for them. Some reinsurers already understand this and are experimenting. The diamond industry understands this and is experimenting with digital representation of hard assets on a blockchain for asset management and insurance purposes through Everledger. Other insurers have made some attempts to test similar concepts.

Indeed, the insurance industry can benefit on more than just the claims side.

We all know customer acquisition is the most uncertain and expensive part of the process in any business. Well-designed digital processes can prove invaluable in customer acquisition and retention. On the front end of the insurance industry, smart contracts can aid in creating easy-to-manage customer policies, which can be fed into databases and tailored and segmented in any way that makes business sense. Data management and security can be enhanced using blockchain technology. In fact, the Estonian company Guardtime has embraced the cyber security end of this technology and evolved a keyless signature infrastructure (KSI) that DARPA is verifying.

See also: Blockchain: What Role in Insurance?  

Blockchain/DLT technology is not a panacea for all. But it is worth exploring as the technology evolves. We are at an inflection point in the development of this technology—a point in time where insurers and others can have a say in how it evolves. Once standards emerge and practical applications are in production, it may be too late.

Time to get on board, insurers, and weigh in! All you need do is participate to make sure your interests are heard and accounted for.

To the insurance industry, I ask you: How do you see this technology affecting insurance?

Unified Communications and Collaboration are Increasingly Important for Insurers

Unified communications and collaboration (UCC) capabilities are becoming increasingly important for insurers and companies in other industries in the rapidly emerging digital marketplace. To determine how enterprises around the globe are using or planning to use UCC, Ovum interviewed over 1,320 enterprise ICT decision-makers in 18 countries in 4Q12 and 1Q13. Ovum's report The Future of Unified Communications and Collaboration: Insurance presents an indicative view of current and planned use of voice and UCC tools in the insurance marketplace, based on interviews with 24 insurance respondents. Specifically, we discuss insurers' ongoing use of telephony (IP-PBX), the gap between insurers' views of employee demands and the reality of what employees want or are familiar with, and the fact that insurers realize that smartphones and tablets will have the largest impact on their operations in the next three years.

Telephony (IP-PBX) remains the most widely adopted UCC technology, but IM and web conferencing follow closely behind

UCC suppliers – telecoms and unified communications (UC) vendors and their value-added resellers (VARs) – need patience with the pace at which the insurance industry adopts technology. It is unsurprising that the survey shows that insurers currently use telephony (IP-PBX), instant messaging (IM), and audio/web conferencing as their key UCC technologies; indeed, insurers have decades of experience with telephony and web conferencing. IM might be considered late to the insurance scene, but claim adjusters can use this communication tool to interact with one another and the claims department in the home office, while life and property and casualty (P&C) insurance agents can use it to interact or send quick messages to clients to confirm a meeting time and place, for example.

Insurers believe their employees inhabit the same time warp as them

Our survey asked insurers to indicate their employees' familiarity with nine UCC technologies. Unfortunately, the list of UCC technologies that employees are familiar with and have a significant interest in is, according to insurers, short. Only 42% of insurers state that their employees are familiar with and have a significant interest in consumer applications such as Skype, Twitter, and Facebook. Only 38% of insurers state that their employees are familiar with and have a significant interest in IM. The proportion of insurers stating that their employees are familiar with and have a significant interest in seven other UCC technologies (shared UC such as unified messaging, UC client on smartphones and tablets, audio and web conferencing, personal video, room-based video conferencing, business social media applications such as Yammer, and team workspaces and content tools such as SharePoint) ranges from 3% to 17%. Ovum is incredulous at this. We believe that insurers are wrong, and to improve their accuracy in this area they should periodically ask their employees which UCC technologies they are familiar with and are significantly interested in.

For insurers, cost both poses a challenge and drives investment in UCC

Insurers say they want to determine a business case or identify a path toward the use of UCC to assist with decision-making before investing in it. They believe they need to overcome the hurdle of lack of user demand. But Ovum wonders if insurers have asked their users about their desire to use various UCC technologies generally and which applications specifically; we are skeptical that such employee surveys have actually taken place.

Cost is also driving investment, along with employee productivity and business flexibility. However, Ovum believes these drivers will prevent insurers from investing in UCC as soon as they should; they could even be considered barriers to UCC adoption.

Insurers believe the next three years will see a shift in important UCC developments

Looking ahead three years, insurers believe that smartphones and tablets will have the biggest impact on UCC. We hope this is because they realize the devices represent platforms on which to expose insurance forms and functionality (e.g. claim forms, quoting/rating, and new policy application forms) as apps. This will enable more insurance employees in the field, whether insurance agents or claim adjustors, to be more productive.