Blockchain is considered to be a breakthrough technology with many strengths and opportunities, but also weaknesses and threats for all industries around the globe. It has the potential to revolutionize many sectors, but it is not a universal remedy and does not replace every single traditional technology. Most businesses do feel insecure whether to invest time and money for Research and Development due to the lack of industry standards and regulations with respect to the technology.
Before being able to guarantee suitability and successful implementation in any business, it is essential to study the differences between public, private, hybrid, and consortium Blockchain types.
In areas of application not strongly relying on Blockchain’s distributed systems, alternative solutions such as Big Data Analytics, Artificial Intelligence, and Machine Learning might be more valuable. Nonetheless, Blockchain promises the unique potential for insurance companies to efficiently serve global markets with areas of application mainly concentrating on parts of the VC where bureaucracy can be reduced by automation. For instance, the use of Smart Contracts where lots of data are analyzed, saved, distributed, and pro- cessed. By implementing BC, fields, where the focus is on customer experience such as Payments, Data Security, Transparency, and Developing New Business and Product Ideas, can be improved enormously. Use cases and new products supported by Blockchain might include P2P Micro-Insurances, Ad-hoc and Parametric Insurance Models, Automized Underwriting, Reduction of Fraud and Abuse, and Health Insurance Processes. Real-Time Analytics in the Form of SCs, Instant Pay-Outs, Automized Claims Management, and Improved Risk Modelling of Insurance Businesses might be achievable by connecting Blockchain and Big Data.
Contrary to the expectations of the author, most industry experts are aware of the benefits and opportunities the technology can bring to their companies. Still, Blockchain is not anchored in their medium- to long-term visions and strategies. Most of the interviewees would rather act as active observers and early followers than taking the lead proactively. Reasons for this behavior, are the lack of market standards and regulations, the absence of solid Blockchain networks, and the shortage of use cases, but also, the lack of know-how and data security concerns.
Table of Contents
1. Blockchain: A breakthrough for the insurance industry?
2. Blockchain / Distributed Ledger Technology in general
2.1 Definitions and hands-on descriptions
2.2 Challenges and opportunities
3. Current status insurance industry
3.1 Value chain of an insurance company
3.2 Improving value chain by introducing Blockchain
3.3 Implementing Blockchain in the insurance sector
4. Use cases and areas impacted
4.1 General use cases for BC
4.2 Use cases in the financial services sector
4.3 Areas impacted in the insurance industry
5. Empirical Research
5.1 Delphi-Method
5.2 Expert interviews
5.2.1 Industry experts
5.2.2 Interview planning and presentation of questionnaires
5.2.3 Implementation and evaluation
5.3 Summary and results
6. Evaluation of applicable use cases
6.1 Deep-dive into use cases
6.2 Roadmap for a successful integration of BC / DLT into the VC
7. Summary and outlook
7.1 Summary
7.2 Critical evaluation
7.3 Outlook
Objectives and Thematic Focus
The objective of this thesis is to analyze the potential of Blockchain (BC) technology within the insurance industry. The study investigates how distributed ledger systems can optimize existing insurance value chains, address current industry challenges, and transform traditional business models through qualitative research and expert interviews.
- Analysis of the current status of the insurance industry regarding digitalization and insurtech trends.
- Evaluation of blockchain/DLT applications and their potential impact on insurance processes.
- Empirical investigation of industry expert perceptions and hurdles concerning BC implementation.
- Development of a roadmap for the successful integration of blockchain technology into insurance business operations.
Excerpt from the Book
Blockchain / Distributed Ledger Technology in general
Contrary to most academic papers, the following provides readers with facts on DLT and BC, before defining each term and clarifying common misconceptions in accordance with Pawczuk et al., 2019:
• BC itself is solely a technology and therefore not the solution to all problems in every industry on our globe (BC is not a panacea)
• BC is not Bitcoin: Bitcoin is the most popular of a myriad of use cases
• Conventional technologies are not redundant or obsolete
• Integrating data from other systems like Enterprise Resource Planning ERP is still needed
• Against many opinions and statements, it is not real-time
According to IBM (2019), BC is able to bring new ways of trust and transparency of data, simplicity and efficiency by reducing immense amounts of intermediary fees and operational spending. No doubt, achieving the full potential of adoption is only possible by demonstrating utility and interoperability. Also, BC is proven to getting more valuable with rising numbers of participants in the network due to added data. Mainly, BC was developed to serve the need for a cost-effective, efficient, secure, and reliable system for conducting and recording any financial transaction around the globe (cf. Gupta, 2020, p. 1). It can be said BC has the potential for modernizing, streamlining, and simplifying the siloed design of the financial industry with a shared fabric of common information.
Summary of Chapters
1. Blockchain: A breakthrough for the insurance industry?: This chapter introduces the potential of Blockchain technology to revolutionize data handling, transparency, and insurance business models.
2. Blockchain / Distributed Ledger Technology in general: This section clarifies technical terminology and provides a baseline for understanding DLT, distinguishing it from misconceptions.
3. Current status insurance industry: Provides an overview of the insurance sector, highlighting the role of InsurTechs and the impact of digitalization on traditional value chains.
4. Use cases and areas impacted: Identifies diverse application scenarios for BC across various industries with a specific focus on financial services.
5. Empirical Research: Documents the methodology, including the Delphi study and qualitative interviews conducted with 16 industry experts.
6. Evaluation of applicable use cases: Deep-dives into specific use cases and provides a roadmap for integrating BC/DLT into insurance operations.
7. Summary and outlook: Concludes the thesis by summarizing findings, evaluating the research critically, and offering future perspectives on the technology.
Keywords
Blockchain, Distributed Ledger Technology, DLT, Insurance Industry, InsurTech, Smart Contracts, Digital Transformation, Value Chain, Delphi-Method, Process Automation, Financial Services, Empirical Research, Innovation, Risk Management, Digitalization.
Frequently Asked Questions
What is the core subject of this thesis?
The thesis examines the potential and practical applicability of Blockchain technology within the global insurance industry through a qualitative analysis.
What are the central topics covered?
Key topics include the distinction between DLT types, the status of digitalization in insurance, specific use cases for BC, and empirical evidence from expert interviews regarding implementation barriers.
What is the primary research goal?
The goal is to determine how blockchain technology can effectively influence insurance value chains and identify which use cases hold the highest potential for adoption.
Which methodology was applied?
The author conducted empirical research using the Delphi method, involving two rounds of surveys with 16 industry experts from various insurance companies and start-ups.
What is the focus of the main content?
The main body bridges the theoretical understanding of blockchain with practical industry applications, structured by value chain analysis, use case identification, and expert evaluation.
Which keywords define this work?
The work is defined by terms such as Blockchain, InsurTech, Smart Contracts, Distributed Ledger Technology, and Insurance Value Chain.
How does the author categorize different blockchain types?
The author distinguishes between public, private (permissioned), hybrid, and consortium blockchains, evaluating their suitability for financial services.
What is the author's key recommendation for insurers?
The author emphasizes that insurers should focus on partnerships and early engagement with industry consortia and technology start-ups to navigate the complex implementation landscape.
- Quote paper
- Ricardo Escoda (Author), 2020, Evaluation of Potential Use Cases for Blockchain in the Insurance Industry, Munich, GRIN Verlag, https://www.grin.com/document/994303
