Insurance has definitely been in the fintech spotlight, with startups like Lemonade and Ladder striving to make a traditionally painful experience as seamless as possible.
But the insurance industry is nearing a turning point as blockchain tech is making sure strides into the sector, according to Brian Behlendorf, executive director at Hyperledger Project.
“Healthcare can benefit tremendously from the distributed ledger technology,” he told Bank Innovation. “Healthcare is competitive, we have providers and insurance companies that compete, but the question is how we can integrate our systems together to lower costs.”
This is where blockchain steps in. “We don’t want one central cloud server to go through either, so the promise of using distributed ledgers and smart contracts is to allow permissioning around customer data, while ensuring confidentiality,” he said.
Last year, Hyperledger launched a Hyperledger Healthcare Working group, with members such as Accenture, startups Gem and Hashed Health, Kaiser Permanente, and IBM. The consortium has just added Change Healthcare, a spinoff of Mckessen Corp.
“The interest has definitely been growing from various companies,” he said. “I could see us potentially starting to build technology particular to this industry, opening the door to open source projects.” Insurtech industry wasn’t as quick to adopt open source as other industries, Behlendorf added, but “it’s getting better.”
However, insurance executives should carefully consider the potential use cases of blockchain tech for their companies, before committing to investments, according to a recent report from Willis Towers Watson Securities and CB Insights.
From the report:
For this “peak hype” innovation, insurance leaders should spend the time to know what the terminology means before leaping to potentially expensive conclusions. Blockchain and smart contracts have excellent potential in the worlds of microinsurance and parametric insurance, where contracts are of necessity simple and standardized. The relevance to other parts of the insurance world – where customized contracts and specialized expertise are required – remains to be seen.