While the crypto-currencies that spurred the development of blockchain technology skyrocket in value, the underlying platform, which decentralizes records in order to make them tamper-proof, is being explored by insurance carriers for several use cases.
Nationwide has agreed to pilot a blockchain-based proof-of-insurance concept on an application being developed by The Institutes RiskBlock Alliance, a consortium of insurers that are attempting to develop standardized blockchain applications for the industry. The application will allow law enforcement to be assured of up-to-date, accurate coverage information from motorists thanks to the security of the blockchain, starting with Nationwide. Eventually, the vision is for more insurance carriers to put their information on the blockchain and reduce reliance on paper forms.
“Blockchain, unlike so many of the other emerging technologies, is different because the value accrues in a platform effect rather than a transactional effect,” says Seth Flory, VP of IT strategy and technology innovation at Nationwide and one of the company’s liasons to RiskBlock Alliance.
Flory says that proof of insurance isn’t the ceiling for blockchain technology in insurance. The insurer has been monitoring blockchain for several years and did an internal test for its applicability to cash reconciliation for Nationwide cash management. But, he says, it’s the kind of business case that can attract people to the transformative power of the technology and eventually drive real solutions for policyholders.
“We think there are many more use cases that will drive a lot of customer value,” Flory says. “This is something that can be done in a short amount of time, expose a lot of stakeholders to blockchain as an underlying technology, and illustrate the purpose of a federated ledger, and a place for multi-party data stores.”
For Nationwide and other insurers whose mobile apps already have a digital proof-of-insurance capability, it is unlikely customers will see a change in the short term. But as part of a larger ecosystem of emerging technologies, blockchain proof of insurance can be a part of a better customer experience overall, with benefits for carriers, policyholders and law enforcement alike.
“If it’s an accident situation, it gives both parties in the accident a capability to tap their phones together or to scan a QR code on each other’s phone. This action will notify the blockchain, check if they have a policy and tell the other person whether there’s active insurance coverage in a verifiable manner,” says RiskBlock Alliance executive director Christopher McDaniel.
