Blockchain has undoubtedly been one of the most talked-about new technologies over the past few years and many expect it to transform the insurance industry – yet uptake remains limited. So why has progress been so slow?
Bijesh Jacob, senior VP of technology and standards for ACORD, is a thought leader on the adoption and implementation of blockchain – he says the excitement around the new technology may actually have hampered its uptake.
“The hype around blockchain is that it will solve everything under the sun […] and I think that impedes some adoption because people are going into blockchain with high expectations,” says Jacob.
Of course, high expectations don’t naturally spell disaster – when artificial intelligence first arrived on the scene, there was a similar level of hype, but implementation was widespread and rapid.
In fact, a 2018 Accenture report found that 80% of insurance leaders intended to have AI integrated into their operations in the next two years.
David Bassi, managing director at EY, says this is partly because blockchain is underpinned by a reliance on other organisations – it’s a tool that enables collaboration between parties, but its very nature means there can’t be a single early adopter or innovator.
“[With AI,] you don’t really need any other market participants to be part of your investment in that space – you get benefit just by investing yourself and doing things within your four walls,” says Bassi. “Blockchain does require those connection points between multiple players.”
While progress may be slow, it’s still apparent and Jacob says the next five years will be significant for the technology.
“I think people are watching some of the more public [use cases] that are out there, particularly the insurwave piece, to see how that takes off,” he says. “As people see that, you end up in situations where other big participants in the insurance value chain could push adoption, and I think that’ll happen.”
Jacob also says there’s been a noticeable increase in the number of experiments and trials which include blockchain – and while these aren’t firm commitments by any stretch of the imagination, they’re a positive sign for the future.
“What’s going to happen is that you’ll have lessons learned which will then help drive a change in direction and an uptick in adoption,” he says.
